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Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
05-13-2011, 05:39 AM, (This post was last modified: 05-13-2011, 05:39 AM by solar.)
#1
Star  Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
With The Napster of Banking Round The Corner, Bring Out Your Popcorn

by Rick Falkvinge [excerpt of article below, complete article at this link]

[beginning of article excerpt--]

Here’s what’s on my radar: banking.

There’s at least a dozen different variants of decentralized cryptographic currencies and transaction systems out there, very sophisticated and totally incomprehensible.

There’s Ripple, BitCoin, ecash, and others.

Just as BitTorrent made the copyright industry obsolete in the blink of an eye, these stand to make banks obsolete.

These, or their successor, will hit a tipping point as soon as somebody makes it easy enough to use.


The technology is there, the use case is there — there’s certainly no shortage of annoyance with big banking.

It’s just a matter of usability now.

When this tipping point happens, there won’t be any central point of control over economies.

It will be like everybody traded in cash, traditional anonymous cash, once again.

Why, then, will this make governments dump a ton of bricks on the Internet?

Up until now, from the perspective of governments, it’s only been some friends complaining about a sales slump of CDs, so governments have given them some legislative breadcrumbs to shut up.

How do you think governments across the world are going to react when they realize they’ve lost the ability to tax the public?

Imagine the ramifications of that for a moment.

The governments of the world are on the brink of losing the ability to look into the economy of their citizens.

They stand to lose the ability to seize assets, they stand to lose the ability to collect debts.

No application of force in the world is going to help: everything is encrypted, and destroying a computer with any amount of police firepower will accomplish zilch.

All the world’s weapons in all the world’s police hands are useless against the public’s ability to keep their cryptographic economy to themselves.

Won’t make a scratch.

If you thought the wars over knowledge and culture were intense, I believe we’ll see much more interesting events unfold in the coming decade.

The decentralized, uncontrollable economy where one lifetime employment is no longer central to every human being is something I’ve called the swarm economy, and I predict it will redefine society to an immensely larger extent than the ability to get rap music for free.

[end of article excerpt, complete article at this link]
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05-13-2011, 05:55 AM,
#2
RE: Will encrypted peer-to-peer currencies make banks obsolete?

Are you kidding? I think governments are setting these up.
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05-13-2011, 06:13 AM, (This post was last modified: 05-13-2011, 06:15 AM by solar.)
#3
RE: Will encrypted peer-to-peer currencies make banks obsolete?
(05-13-2011, 05:55 AM)zapoper Wrote: Are you kidding? I think governments are setting these up.

Perhaps. Sleepy

Icon_arrow Caution is admirable in investigating and/or participating in any peer-to-peer activity ...

... encrypted or not! Smile

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05-13-2011, 07:32 PM,
#4
RE: Will encrypted peer-to-peer currencies make banks obsolete?
Yeah, there was the eLibertyDollar ... and the secret service really liked that one.
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06-07-2011, 01:27 AM, (This post was last modified: 06-07-2011, 01:29 AM by solar.)
#5
Star  Are peer-to-peer currencies the economic "singularity"? >> a review of bitcoin
Bitcoin is the Economic Singularity

excerpts below from a blog by Astrohacker, complete blog at this link.

June 4, 2011

Icon_arrow [beginning of first blog excerpt--]

Three weeks ago I discovered bitcoin.

It sounded interesting enough that I decided to devote an entire Saturday to it—that was my “day of bitcoin.”

My day of bitcoin evolved into my three weeks of bitcoin.

In that time, I have been obsessively reading about it, writing about it, buying it, and creating businesses for it.

As far as I can recall, I have never been so obsessed about anything. But the reason I am obsessed with bitcoin is simple: it is the most incredible thing to ever happen in the world.

I am not exaggerating.

We are presently witnessing the most disruptive change to ever happen to collective human behavior.

Although there have been other disruptive changes to human behavior in the past, bitcoin is happening much faster than those.

Consider, for instance, computing.

Charles Babbage invented the mechanical Analytical Engine in the 1830s.

It took on the order of a century or more before those seeds of an idea blossomed into something that actually started being used on a large scale.

Or consider, say, the internet, which was invented in the 1960s, but took on the order of decades before it saturated the world. That was faster than computing, but still long compared to bitcoin.

Bitcoin was only invented about 2.5 years ago.

And already, I have been able to ask random people about it, and they know what I’m talking about.

If the growth of bitcoin continues exponentially like most widely useful technologies, it will only be on the order of years—not centuries, not even decades, but individual years—before virtually everyone is using it.

The standard term for such a rapid change is a “singularity".

[end of first blog excerpt, complete blog at this link]

+++

Icon_arrow [beginning of second blog excerpt--]

Bitcoin is useful for all the same reasons that any currency is useful: it is a medium of exchange.

The advantage of being decentralized is that you do not have to rely on a third party for security.

Thus, bitcoin is more useful than digital dollars for the same reason that digital dollars are more useful than paper dollars, or paper dollars are more useful than gold: it is just easier to pay people with them.

No banks means less headaches, in the same way that no gold means there is a lot less weight you have to lug around.

Bitcoin is thus a better answer to a problem humanity has been slowly solving for millenia: how do we remove barriers to payment?

There are other advantages to bitcoin too, besides being more convenient.

The fact that no central party party controls the supply means no central party can inflate it to redistribute wealth in their favor.

No one can debase bitcoin to pay for a war.

Also, since it is deflationary (in the sense that prices reliably go down), it encourages savings, because everyone gets richer that way.


[end of second blog excerpt, complete blog at this link]

+++

Icon_arrow [beginning of third blog excerpt--]

Bitcoin will take over as the currency of the internet.

It will also take over as a store of value; why earn a measly, less-than-inflation interest rate in a savings account when you can have steady appreciation of value if you just keep your money in bitcoin?

People will spend less and save more because they know if only they do that, they will be richer in the future.

Companies will no longer produce things of no value, because no one will buy them.

The world will become more efficient, because there will be less waste.

Everyone will realize how much they lose by spending money on valueless things.

There will be a more equitable distribution of wealth, because no one can inflate (or, to use a less charitable term, counterfeit) bitcoin at their whim.

Bitcoin will also take over any fiat currencies that inflate too rapidly (think Zimbabwe, Argentina, or any other country that presently has or will have a rapidly inflating currency).

Central banks will be under enormous pressure to stabalize their currencies or become obsolete.

Many banks will collapse.

Many fiat currencies will become worthless.

Probably, all fiat currencies will become worthless eventually, because it is only a matter of time before the central banks fall into the temptation of inflating their currencies just a bit too fast.

[end of third blog excerpt, complete blog at this link]
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06-07-2011, 02:16 AM,
#6
RE: Are peer-to-peer currencies the economic "singularity"? >> a review of bitcoin
Sounds a lot like the Digital Coin program that Money as Debt II hinted at and Money as Debt III has expanded upon. I talked with the producer of Money as Debt and he was quite evasive as to the specifics.

The programs are centralized and montitored (goodbye black market and underground currency based economy) and anything with a 1 and 0 can be hacked, even more easily by insiders be they administrators or programmers.

Good way to transfer the drug market to big pharma (we see the transition already in patents and medical marijuana and gov't grow ops), install a VAT/Sales Tax and watch and audit everyone's transactions in the name of terrorism and welfare system abuse no doubt. They are already installing this in India with their welfare and social programs via government issued cell phones.

Here's the warmup (video) and the pitch for the Digital Coin.

Same deal. Zeitgeist is also advocating this by way of the RBE. Even the IMF is on board as a part of their corporate governance with their system for homogeneous currency based on par value.

Edward G. Griffin was also on board with this in his meeting with honchos at Jekyll Island recently.
There are no others, there is only us.
http://FastTadpole.com/
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06-09-2011, 06:32 AM,
#7
RE: Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
Still haven't heard a negative critique of BitCon. Anyone care to pick it apart - or is this the real deal?

It claims to be annonymous and secure. In reality there is nothing that would be perfect but would it be good enough?

The proof of work concept to verify a transaction list or block where the first client to find the solution announces its good fortune to the whole network and earns a little reward for itself in the form of some shiny new Bitcoins may be something yo look at when considering any merit to this system.

At first glance it uses some interesting methods akin to a 21st century digital clearing house but is painfully close to something like Airmiles or Canadian Tire Money -- corporate issued cash for my liking.

There are transaction processing fees (usury) it is a system and codebase that is proprietorially owned.

Encryption is interesting when combined with annonymity. There will always be a few ahead of the curve and they are usually done by insiders or those with access to a ridiculous amount of computing power. The days of the teenage hacker are coming to an end. Enter the era of the zombie computer - Cloud computing, stuxnet type viral threats, built in OS backdoors make breaches that much harder to track and trace.

Here's Bitcon's sales brochure

Bitcoin: A Peer-to-Peer Electronic Cash System
by Satoshi Nakamoto satoshin@gmx.com http://www.bitcoin.org
http://www.bitcoin.org/bitcoin.pdf (9 pages PDF)

.. and marketing video
http://www.youtube.com/watch?feature=player_embedded&v=Um63OQz3bjo

.. and another gleaming review.

Quote:Bitcoin: inside the encrypted, peer-to-peer digital currency
By Thomas Lowenthal | Published about 16 hours ago

Bitcoin—a pseudonymous cryptographic currency designed by an enigmatic, freedom-loving hacker, and currently used by the geek underground to buy and sell everything from servers to cellphone jammers. No, this isn't a cyberpunk artifact from Snow Crash or Neuromancer; it's a real currency currently valued several times higher than the US dollar, the British pound, and the Euro.

Bitcoin is a virtual currency, designed to allow people to buy and sell without centralized control by banks or governments, and it allows for pseudonymous transactions which aren't tied to a real identity. In keeping with the hacker ethos, Bitcoin has no need to trust any central authority; every aspect of the currency is confirmed and secured through the use of strong cryptography.

Over the last few months, Bitcoin's value has risen by an order of magnitude as the sagas of Wikileaks and Anonymous (among others) have highlighted the limits of a financial system which relies on centralized intermediaries. With a current estimated market capitalization of about $100 million, Bitcoin has recently graduated from a theoretical techno-anarchic project patronized by libertarians and hackers to a full-fledged currency prompting comment from technologists and economists. At the time of this writing, one Bitcoin (BTC) is worth about US$15.

So how does Bitcoin work? Is it really secure? And is it here to stay—or just another digital currency fad? Glad you asked.

Complexities of cryptographic currencies

The problem with purely digital currencies is that of double-spending. Economists in the audience will note that digital products like a movie or a text file are non-rivalrous. If you have a copy of my pseudo-trip-rock band's new MP3 album, there's still just as much MP3 to go around for everyone else who wants one. That's not a problem for files, but it is a problem with currency, since the whole point is that there's a limited supply. If you use a dollar at the grocery store today, you can't go out and spend that same dollar at a bar tomorrow.

The usual solution to the double-spending problem is a trusted intermediary. PayPal makes sure that you can't spend the same dollars twice by deducting them from your account before they get added to someone else's account. Visa, MasterCard, and every other bank and payment processor do the same. However, this centralized approach is the one that enigmatic creator Satoshi Nakamoto specifically tried to avoid in the original Bitcoin design. The idea was to use cryptography to create verifiable transaction records without the need to trust anyone but your own calculations.

The Bitcoin solution uses cryptography and an open transaction register. Whenever you spend a Bitcoin, you cryptographically sign a statement saying that you have transferred the coin to a new owner and you identify the new owner by their public crypto key. Whenever they need to spend the coin, the new owner uses his private key to sign it over to some further owner. As soon as a transaction takes place, the recipient (who has a very strong incentive to ensure that you don't spend the coin twice) publishes the transaction to the global Bitcoin network. Now every Bitcoin user has incontrovertible evidence that the coin has been spent, and users won't accept that coin from anyone but the new owner.

Mining and make-work

As a digital currency, Bitcoin suffers from a tangibility problem. Unlike other currencies traded online, you can't go to a bank and withdraw physical coins, so what are they? More importantly, where do they come from? Coins are essentially agreements between all the Bitcoin nodes to accept a particular coin as currency. They are created gradually according to a precise protocol in order to reward those who contribute and maintain the network, control the rate of creation of the currency, and maintain the integrity of the transaction list.

In a process known as mining, individual Bitcoin users attempt to generate new coins by checking the integrity of the transactions list. They confirm the previous transactions and attempt to solve a difficult proof-of-work problem which involves exhaustively trying different solutions. There are a very large number of such potential solutions, so the likelihood of finding the solution depends how many other people are looking for it and how much computing power you devote to the problem. The first client to find the solution announces its good fortune to the whole network and earns a little reward for itself in the form of some shiny new Bitcoins.

By finding the newest solution to the proof-of-work problem, a Bitcoin client confirms the history of previous transactions and moved the transaction register forward, allowing new debits and credits to form part of the next block that can be mined to earn more coins. Future coins can't be mined in advance, because the computation to find the new block (and hence create new Bitcoins) relies on the the chain of previous blocks and the history of transactions since the most recent block.

The number of new coins generated per block gradually decreases over time. It started out at 50 BTC, but will dwindle to zero sometime in future when all 21 million coins have been generated. Fortunately, coins can be divided down to the eighth decimal place, which may prove increasingly useful if their value grows.

What's a few coins between friends?

One of the difficulties with a novel currency like Bitcoin is adoption and valuation. The same was true when the greenback paper dollar was first introduced, and it's a real problem with any means of exchange. After all, a currency is little more than something useless but rare which everyone agrees to trade for useful things, whether apples or assault rifles. National currencies have the advantage that governments demand them in taxes and require them to be accepted, which provides both a particular market and a high rate of adoption.

So, why would anyone exchange their hard-won dollars for Bitcoins, or accept Bitcoins in exchange for real products like a carton of milk or a subway ride? As a currency, Bitcoin has a number of desirable features which are not found together in any other currency. Cash has features like anonymity and eminent portability, but also comes with the downside that you have to physically move it from place to place to use it. Credit cards and other trust-based electronic currencies can be used instantly over any distance, but you have to attach your real identity to the purchase.
An anonymous Bitcoin transaction

Bitcoins combine the advantages of the two methods. Using Bitcoins, I can buy a racy t-shirt from Tibet and computer time from China without either merchant knowing who I am, or my bank knowing what I bought. This is useful not just for those purchasing questionable items (the downside of anonymous currency flows), but also for those who don't want merchants, banks, or card companies to be able to build up detailed profiles of their life, likes, and habits.

Since they're useful, some people want to use Bitcoins. Since some people want to use them, merchants have an incentive to accept them in order to attract the business of those customers.

This simplified economic model is not uncontested. Ars tech policy contributor Tim Lee has publicly criticized Bitcoin's economic model, both from the point of view of external market forces and over the internal incentive structures inherent to the protocol. Tech and economic policy commentator Jerry Brito provides a counterpoint, emphasizing Bitcoin's decentralizaion, which makes it very hard to control, but concedes that it is very hard to distinguish between a currency bubble and currency value.

Bitcoin's anonymity has already attracted Congressional attention. Sen. Chuck Schumer (D-NY) this weekend blasted Silk Road, an online drugs outlet that allegedly relies on TOR to obfuscate Internet traffic and Bitcoins for payment. "It's an online form of money laundering used to disguise the source of money, and to disguise who's both selling and buying the drug," Schumer said.
http://arstechnica.com/tech-policy/news/2011/06/bitcoin-inside-the-encrypted-peer-to-peer-currency.ars

Check the comments on the article and around the web on this potential test balloon and warm-up into a world of corporate controlled monitored, identified tracked transactions and currency aka Everything on the Credit Card just what the Know you Customer KYC, DoHS RealID and the NSA's Trusted Identities in Cyberspace / CYBERCOM system are all trying to achieve.

I'd rather look a man in the eye and shake a person's hand during a transaction than having something convenient. I do like the clearing house throwback though this can be mirrored somehow, at least until we have a give freely, take freely society of respect and common morality.

Related:

The MondoNet Project >> peer-to-peer mesh networking ...
http://concen.org/forum/showthread.php?tid=40140

Adam Smith's Real Bills Doctrine : Interest Free Money Created From Value
http://concen.org/forum/showthread.php?tid=32492

There are no others, there is only us.
http://FastTadpole.com/
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06-17-2011, 07:31 AM,
#8
RE: Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
What's keeping Visa, MasterCard or Verichip or some other massive banking financial enterprise from buying this company out?

It's money generated, mediated, issued, dispersed and channelled by a private corporation.

There are fees. They are tracked as is EVERY transaction.

Quote:Very low fees

Currently you can send Bitcoin transactions for free. However, a fee on the order of 1 bitcent will eventually be necessary for your transaction to be processed more quickly. Miners compete on fees, which ensures that they will always stay low in the long run. More on transaction fees (Bitcoin Wiki).
http://www.weusecoins.com/ Under > The Features in 'Detail'

The transaction fee is processed by and received by the bitcoin miner. When a new bitcoin block is generated with a successful hash, the information for all of the transactions is included with the block and all transaction fees are collected by that user creating the block, who is free to assign those fees to himself.

So in other words an MLM marketing scheme. Allowing block miners ad who's at the top?

Simply have your node maintain a connection to Lightfoot Hosting's node, which relays indiscriminately.
~https://en.bitcoin.it/wiki/Free_transaction_relay_policy

The client is free and open source but the transaction processing isn't.

Read the fine print before plugging this one ladies and gentlemen.
There are no others, there is only us.
http://FastTadpole.com/
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06-17-2011, 10:34 AM,
#9
RE: Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
There are critiques of Bitcoin, there is a discussion going on at the Mises Institute forum:

http://mises.org/Community/forums/t/9853.aspx
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06-20-2011, 09:38 AM,
#10
RE: Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
On the newest Peter Schiff Show:

"Today's guest is Donald Norman, co-founder of Bitcoin Consultancy, on why an online digital currency is the monetary system of the future. Peter is looking forward to your calls on politics, finance, and the economy."

Will post as soon as it is available. An Austrian Economist, Peter Schiff opposes Bitcoin.
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06-20-2011, 01:08 PM,
#11
RE: Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
I would be quite weary about this. In theory it sounds good but dont you guys find it interesting how this has become "big news" all at once with many major media outlets focusing on the fact that drugs can be bought, sold and shipped through the mail anon?

I have looked into this and hit some forums and SO FAR everyone seems quite happy with this system (other than the fact that the mining takes alot of time)- But I dont like it and sense a set up.

No I cannot pick it apart, no I cannot give any negative feedback but my spider sense is tingling. I predict this will get quite big, quite soon and like most things "underground" will move towards the mainstream before being taken down with fury and vengeance and catching many an unsuspecting person in many an activity.

Thats my 2 cents on the matter for what its worth.
[Image: soldierpie.gif]
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06-20-2011, 01:31 PM,
#12
RE: Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
Well we got the mining giving a finite amount of bitcoin currency when the valuation of it is in flux and the transaction fee is hard coded (something like 0.00001 BT) as well so that will go up in turn the more division goes up making what seems a negligible cost now quite prohibitive once everything is sliced up to ~13 decimal places as they state they will be.

This is a test bubble from the other shoe that we've been waiting to drop. Besides the fact that it's digital, and those inherent issues (can be manipulated, logs every transaction, potential computer security breaches, allows for more taxation by forcing sales tax on this payment medium). That in itself makes it a stupid idea.

It's been pitched by Zeitgeist for years now, the Money as Debt folks that I had put in their place had just released their movie and this was planned all along. We'll see 100 different variations on this. The fact that so many libertarians and anti banksters that are wanna be economists are eating this up just proves they have no clue or are willing shills.

I don't claim to be know it all about macro-economics, currency systems or even bitcoin (yet) but I know more than enough to see this is a scam and/or an avenue to run scams.

This really is corporate issued currency, an MLM scheme, a digital tracking device and a nickel and dime (that would evolve to a quarter and dollar) per transaction parasite.

In a nutshell this is no better than trading Airmiles Points on PayPal with Goldman Sachs doing the integrity checking and getting issued blocks of newly minted currency as their reward for work.

I must tip my hat to the marketers that preyed upon banking debacles managed to entrench themselves into certain sectors of the freedom movement, the fake alternative media, libertarian groups, freeman groups and the likes and for being patient enough in waiting for this opportune time of economic crises. A perfect have people looking for a nice "easy button" solution. A perfect time to introduce their new digital monster.
There are no others, there is only us.
http://FastTadpole.com/
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06-20-2011, 01:45 PM,
#13
RE: Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
In the first Bitcoin theft of its size, a user has lost 25,000 BTC — or nearly $487,749 at today’s market rates — to an unknown thief.

Quote:"While the Bitcoin community has always been quick to point out that it’s harder to forge a Bitcoin than to forge a dollar, it’s quite easy to take someone else’s Bitcoins: all you have to do is gain access to their computer’s hard drive. Once you’re in, stealing Bitcoins is easier than taking a wallet in the real world, and there’s no recourse for getting them back.
http://thenextweb.com/industry/2011/06/15/close-to-us500k-stolen-in-first-major-bitcoin-theft/

Source of that story: Last week at the Bitcoin forum: I just got hacked - any help is welcome! (25,000 BTC stolen)
https://forum.bitcoin.org/index.php?topic=16457.0
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06-20-2011, 01:50 PM,
#14
RE: Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
Wow poor guy - but a shining example of how anything with a one and zero can and will be hacked to pieces.

@Bluegrazz
Just because the MSM is for it doesn't mean it is a bad thing. They aren't all bad and have you ever heard of esrever psychology¿
There are no others, there is only us.
http://FastTadpole.com/
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06-20-2011, 05:54 PM,
#15
RE: Will encrypted peer-to-peer currencies make banks obsolete? BitCoin, ECash Ripple ..
I read an article a short while ago about a website that was like a hub for selling illegal drugs using bitcoins. Perhaps it wastrying to demonize the bitcoins but I actually thought the idea was pretty damn cool.
As far as a fiat money, it still is. And I'd still have to use FRNs to get the bicoins so it doesnt really seem all that practical but maybe im not looking at it the right way.
"Listen to everyone, read everything, believe nothing unless you can prove it in your own research"
~William Cooper

DTTNWO!
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