The Bitcoin Crypto-Currency Mystery Reopened

http://www.fastcompany.com/1785445/crypto-currency-mystery

by Sato • 15 years ago

86 32 15 years ago

fastcompany.com

hieronymusN• 15 years ago

Is it me, or does this all start to read like a Neal Stephenson novel?

pavel_lishin• 15 years ago

I think this year, for many different reasons, is the first time that I've really felt like I was living in The Future.

TelmoMenezes• 15 years ago

It's not you. I happen to be reading "Zero History" at the moment and it felt almost surreal to read this article. Gave me a weird feeling I was falling inside the story, if that makes any sense.

sp332• 15 years ago

Or William Gibson's recent "Spook Country" trilogy.

tqgupta• 15 years ago

Or Daniel Suarez's "Daemon"

DiabloD3• 15 years ago

Life imitates art, or so they say. I consider it a feature of Bitcoin, really.

RickHull• 15 years ago

Keep in mind that the journalist here, http://en.wikipedia.org/wiki/Adam_Penenberg , famous for uncovering the Stephen Glass journalistic fraud, has a certain flair for the dramatic.

chris_dcosta• 15 years ago

I have long been an advocate for a single internet currency, independent of all governments. Looks like I'm not alone.

It's a hard sell though because so much of our lives are tied into the currency of the region that we live. How would you pay your rent online? How would your landlord settle their mortgage repayments?

We tend to believe that the fabric of our society is tied to the currency, and "real-world" money, even if in reality it no more exists than virtual money. In fact in the UK there have been a number of Towns who have printed their own money, and visitors come and buy that currency in preference to the National Currency for use in the town's shops bars and restaurants.

gte910h• 15 years ago

That is not working very well in Europe right now with the Euro...

alttag• 15 years ago

  > I have long been an advocate for a single internet currency,
  > independent of all governments.

I don't see a single currency as a replacement for government currencies for the simple reason that managing inflation/deflation (including introduction of new money as the population/economy changes), particularly as a way of managing debt and facilitating class mobility are decisions that vary between cultures.

The lack of fiscal control was a common complaint some decades ago against the euro forming, and as another comment points out, the loss of monetary control has exacerbated some European countries' fiscal problems.

Adopting an common internet currency intended to replace global currency will likely fail for this reason, and also because of governments' concerns for the tax/revenue implications.

nhaehnle• 15 years ago

I totally understand how governance-free currencies appeal to libertarians and hacker-types, but the fact of the matter is that they do not serve society well.

The Euro is an empirical data point in that direction. This illustrative article from 1998 gives another data point: http://www.slate.com/articles/business/the_dismal_science/19...

The more theoretical explanation why governance is necessary is roughly as follows. While our living standards are ultimately only concerned with real wealth, the fact of the matter is that our economy is driven by moving nominal wealth around, i.e. it is driven by flows of money. If we ignore issues of fair distribution for a moment, our real living standards depend very much on how much money flows per time as aggregate demand towards buying things.

But flows of money add to and subtract from the stocks of financial assets of individuals. And since every financial asset you own is somebody else's liability, your ability to accumulate net financial assets is limited by others' willingness to incur net financial liabilities.

Now economists like to theorize that those things balance out nicely in equilibria, where the desire to accumulate net assets and the willingness to incur net liabilities somehow are matched by a market. In practice, however, the paradox of thrift occurs.

This is because (a) the real world does not actually work the way that those particular economic models say it does, and (b) even if the real world did work that way, the conclusions rely on assumptions about how uncorrelated the individuals in the market are. Particularly in times of crisis, the behavior of individuals and firms tends to be highly correlated indeed, and you end up in a kind of Prisoners' Dilemma, where nobody wants to be the first person to incur liabilities, but because of that, the flows of money dry out, and because of that, the real living standard decreases.

A governing body can break this kind of symmetric behavior by unilaterally deciding to incur additional liabilities via spending.

Note that I implicitly assumed in my argument that your goal is to provide for the society's real living standards, and I subordinate economics to that goal. I realize that many "sound money" advocates do not think that way, though I've never really understood why.

I recognize that the governing body can also cause a huge amount of trouble, but limiting that trouble is what democracy is for.

joelhaasnoot• 15 years ago

So this is what we call investigative journalism these days?

bpolania• 15 years ago

The main problem with bitcoin is that it seems to be more wishful thinking than a serious currency ruled by macro economic factors. There's not a clear correspondence about how the wealth is created and the demand for currency, not to mention that its deflational nature - i.e. its value is always expected to grow- leave serious questions about who'd you invest it, since its value is expected to increase in relation to the investment instrument, so why bother to invest?

I accept that the general idea is not bad, but it'd need to follow some basic standards in order to be attractive to regular people, you don't have to put your son college fund in a currency with no central authority and no convertibility, you can't expect any currency to always perform well so you need options, in case BitCoin start to lose it's value and there's no way to convert that money into Dollars or Euros you'll be stuck with a lots of worthless bits that won't let you buy not even Lehman Bros. junk bonds.

ianpurton• 15 years ago

"its value is always expected to grow"

It's value is down to about $5 from a high of about $30.

The deflation argument is well argued here http://bitcoin.stackexchange.com/questions/66/will-deflation...

"no central authority and no convertibility"

Lack of central authority is seen as a benefit to some.

Also Bitcoin is convertible through numerous exchanges and has an options market https://www.bitcoinica.com/

"in case BitCoin start to lose it's value "

Make your mind up, I though it was deflationary ?

I personally see a good future for Bitcoin, it may turn out to be the first of many crypto currencies. Anyway I've based my startup on it. http://strongcoin.com

icebraining4• 15 years ago

Make your mind up, I though it was deflationary ?

You're mixing up the concepts. Inflation makes the currency lose value, not deflation.

Estragon2• 15 years ago

  > It's value is down to about $5

Hovering around $4, lately!

http://bitcoincharts.com/charts/mtgoxUSD#rg1zvztgSzm1g10zm2g...

starwed• 15 years ago

The main problem with your comment is that it has nothing to do with the article...

icebraining4• 15 years ago

(...) it begs credulity that someone who has filed patent applications dealing with cryptography had never head of Bitcoin until I asked about it.

I don't see why; Bitcoin is hardly innovative in cryptographic research (in fact, that's part of its appeal, since it makes it more trustworthy), and I don't see why should a cryptography expert necessarily be interested in new currencies or financial tools.

gwern• 15 years ago

> Bitcoin is hardly innovative in cryptographic research (in fact, that's part of its appeal, since it makes it more trustworthy

Nick Szabo disagrees: http://unenumerated.blogspot.com/2011/05/bitcoin-what-took-y...

streptomycin2• 15 years ago

So this guy finds a phrase that's kind of similar in the Bitcoin paper and in a patent application, then sees that the patent application is about some unrelated kind of cryptography, and then decides they must be Satoshi? This is nonsense.

dstien• 15 years ago

"But the point of this column isn't to claim we found Satoshi Nakamoto. It's to show how circumstantial evidence, which is what the New Yorker based its conclusions on, isn't synonymous with truth."

mehwoot• 15 years ago

It was not "kind of similar", it was exactly the same phrase. A phrase that only occurred 26 times and most of which were quoting the original source.

As someone who has written research papers, and read quite a few by colleagues, this struck me as significant because people really do have neat, unique phrases that they like reusing, especially when explaining concepts in their field.

But yes, it is still circumstantial at best. And the author acknowledges this, because they weren't going to publish this except as a response to a more recent article.

streptomycin2• 15 years ago

Except it wasn't the same phrase. It's:

"computationally impractical to reverse"

"computationally impractical to reverse-map"

And even if it was exactly the same, there's still a multiple comparisons problem.

tomotomo• 15 years ago

I think there are still plenty of easy avenues to search for the man's (or team's) identity. It would only be appropriate to crowdfund a pool of bitcoins for a bounty on discovering Satoshi Nakamoto's identity.

soapdog• 15 years ago

anyone here has some address to a page where we can keep track of bitcoin related news?

Estragon2• 15 years ago

http://www.reddit.com/r/bitcoin

dreww2• 15 years ago

http://news.ycombinator.com

apparently.

dreww2• 15 years ago

"For one, it begs credulity that someone who has filed patent applications dealing with cryptography had never heard of Bitcoin until I asked about it. That would be like a journalist claiming he never heard of Twitter."

this is a baseless assertion and essentially the crux of his argument. maybe real cryptographers don't spend any time thinking about bitcoin because it has the same relationship as twitter and real journalism.

The Bitcoin Crypto-Currency Mystery Reopened

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