Bitcoin – The Internet of Money

http://startupboy.com/2013/11/07/bitcoin-the-internet-of-money/

by DanielRibeiro • 13 years ago

177 63 13 years ago

This is very interesting:

Bitcoin has a scripting language which enables more than a “send money from X to Y” transaction. A Bitcoin transaction can require M of N parties to approve a transaction. Imagine Wills that automatically unlock when most of the heirs agree that their parent has passed, no lawyer required. Or business accounts that require two of any three trusted signatures to approve an expenditure. Or wire escrows that go through when any arbiter agrees that the supplier sent the goods to the buyer. Or wallets that are socially secured by your friends and family. Or an allowance account accessible by the child and either of two parents. Or a crowdfunding of a Kickstarter project that pays out on milestones, based on the majority of the backers approving the next payment. The escrow in each case can be locked so that the arbiters can’t take the money themselves – only approve or deny the transaction.

The scripting language can also unlock transactions based on other parameters. Unlocking them over time can enable automatic mortgage, trust, and allowance payouts. Unlocking them on guessable numbers creates a lottery auditable by third parties. One can even design smart property – for example, a car’s electronic key so that when and only when a payment is made by the car buyer to the seller, the seller’s car key stops working and the buyer’s car key (or mobile phone) starts the car. Imagine your self-driving car negotiating traffic, paying fractional bitcoin to neighboring cars in exchange for priority.

I've been following Bitcoin since the beginning and had no idea it supported "transaction approved only when M of N participants agree."

How do you feel about those scenarios? Also, does anyone know of other little-known Bitcoin functionality?

rms• 13 years ago

An important caveat is that Bitcoin Script isn't enabled in the current implementation of Bitcoin, for obvious security reasons. The immense possibility of Script is yet another reason I am long on Bitcoin.

tlrobinson3• 13 years ago

Only parts of it aren't enabled. You can already do a lot with Script:

"This is a list of all Script words (commands/functions). Some of the more complicated opcodes are disabled out of concern that the client might have a bug in their implementation; if a transaction using such an opcode were to be included in the chain any fix would risk forking the chain."

https://en.bitcoin.it/wiki/Script

maaku2• 13 years ago

What are you talking about? Every single transaction uses the bitcoin scripting language, and has since the genesis block. There are certain rules about which transactions are relayed based on the scripts they contain, but scripting certainly is an integral part of bitcoin as it exists today.

gojomo4• 13 years ago

The scripting language vision has been there from the beginning, but parts of it have been 'off' (in the reference client) because of incomplete implementation, or concern that the implications and potential bugs aren't sufficiently understood.

I wonder if a future Bitcoin offshoot might even use a more general standard language for in-ledger transactions. Javascript? LLVM?

ssadler• 13 years ago

They couldn't, because Javascript etc are turing complete, so you can't predict if they're going to end (halting problem). With bitcoin you know that the script will end and that the running time will correlate loosely with the size of the script, so you can't really use it to mess up network nodes. Butcoin scripts have no loops or goto.

pcwalton• 13 years ago

LLVM would be exceedingly bad due to its undefined behavior. A malicious actor could easily fork the block chain.

NhanH• 13 years ago

Bitcoin use a scripting language for the transactions, as described in here[0][1].

Interestingly, I believe that this is one of the case where "lazy programmers make best programmers": instead of implementing the transaction system, Satoshi decides that he couldn't be bothered and just put in a scripting system instead (I have no citation for this, and can't claim for certain that this is the case, it was just something I read a while ago).

However, due to security concerns, I think that most of the scripting ability is currently disabled.

[0] https://en.bitcoin.it/wiki/Script

[1] https://en.bitcoin.it/wiki/Contracts

tlrobinson3• 13 years ago

Yes, this is the most exciting part of Bitcoin, IMHO. It's quite amazing what sort of problems you can solve.

I highly recommend watching this talk by Mike Hearn, as well as reading the links in NhanH's comment: https://www.youtube.com/watch?v=mD4L7xDNCmA

topynate2• 13 years ago

Provably Prune-able Outputs! See https://bitcoinfoundation.org/blog/?p=290. The idea is to support adding a little bit (80 bytes) of extra data to a transaction, while signalling to people who don't need to know about it (i.e. almost everyone) that they can happily ignore any such data and thus avoid downloading it.

taariqlewis• 13 years ago

This has the potential to allow new protocols to be built ontop of bitcoin. Mastercoin is one new protocol that uses the pruneable, provable outputs functionality. Learn more about Mastercoin here: https://github.com/mastercoin-MSC/

nullc4• 13 years ago

Here is an exceptionally fun example of Script use: https://bitcointalk.org/index.php?topic=293382.0

Beyond script there isn't a whole lot— nlocktime lets you make transactions which cannot be mined until a specified time in the future. This lets you build protocols that have "refunds", so that they don't cause funds to get stuck if a participant walks away.

But even just using a few features of script and nlocktime is exceptionally powerful:

Securely and privately trading Bitcoins for other cryptocoins (including Bitcoins): https://bitcointalk.org/index.php?topic=321228.0

Buying computationally verifiable information in an environment of mutual distrust: https://en.bitcoin.it/wiki/User:Gmaxwell/why_hash_locked

One of the most important things script does is allows you to produce transactions which are bound into more complex protocols occurring outside of Bitcoin in a secure way. This allows you to extend Bitcoin's trustless decentralization into things which aren't part of Bitcoin proper.

skriticos2• 13 years ago

I have an issue with that particular scenario. What if your three hairs secretly hate you and just agree to declare you dead?

But I can see it working with some adjustments: make your contractually obliged lawyer part of the transaction and include his fees. This way he can't grab all the money for himself and your usurpers can't get to your money that easy.

I know, I'm pessimistic.

GotAnyMegadeth• 13 years ago

If that's the case, give your money to a Cat charity rather than your hateful heirs

lingben• 13 years ago

Much more likely, existing financial services and platforms will co-opt the useful parts of bitcoin. The result will be a more robust solution on their part and a casting of bitcoin into the pile of interesting historical phenomena.

gojomo4• 13 years ago

Just like pre-internet online-services and publishers co-opted the best ideas from it, relegating the internet itself into the pile of historical curiosities.

legutierr• 13 years ago

Don't be so cocky. In most of the US, where one or two ISPs rule over the local market, the concept of a decentralized internet is at best a memory (if it ever came to fruition there at all), and across the US the loss of network neutrality is potentially only as far away as the next presidential election.

grey-area• 13 years ago

If you wish to use that analogy, the web borrowed ideas from SGML and project Xanadu and co-opted the best ideas from them, relegating SGML itself and other ideas like it to the dustbin of history.

It is quite possible Bitcoin will be superseded by some other system introduced by one of the existing major transaction processors - they have a huge amount to lose if Bitcoin becomes a standard, and everything to gain by owning the future of transactions.

marincounty• 13 years ago

At least with Tulips your can save the dried pedals. Speculation in this won't hurt the rich boys, but the salaried boys will be very limp. Oh, finance will take the theories, and code--all for free. Too bad that Japanese guy didn't patent the code, and the idea?

bingofuel• 13 years ago

I think he (or she) has more to gain since all of the beginning blocks were mined and probably owned by him.

Side note: I don't think anyone's confirmed Satoshi Nakamoto is actually Japanese.

SwellJoe• 13 years ago

Why would someone choose a bank-owned Bitcoin alternative over the distributed Bitcoin? Would people rather pay more fees (my bank charges $40 for an international wire transfer...I did the same with Bitcoin for about two pennies, and that was a voluntarily paid feed)? Do people like having their finances judged by faceless corporations, and if you don't keep enough of your money in the bank, they fine you?

What are the advantages that make your idea of "finance will take the theories, and code" seem plausible, to you? And, what would a patent have done to improve on the situation for anyone?

blibble• 13 years ago

ability to rollback fraudulent transactions?

the knowledge you'll get most of your deposits back if the bank goes bust? (government mandated insurance schemes like FDIC/FSCS are really expensive for banks... this makes up a big part of your bank fees)

the bank's capability to match up long term loans with short term deposits?

people really want a 25 year mortgage, but also want instant access to their savings, the banks (mostly) match up these two incompatible goals: this is a useful function

prostoalex• 13 years ago

As posited BitCoin is a mechanism for storing value as well as transaction information. If you have a liquid enough exchange, allowing you to enter/exit the currency within seconds, the implications of transaction protocol are pretty wide - instantaneous verified commission-free money transfers around the world. Those who choose not to use BitCoins for value storage can then safely exit into their preferred currencies.

zxcvvcxz• 13 years ago

I feel so behind / left-out of the Bitcoin phenomenon. I thought it was a fad a few years ago, but it seems as though it's here to stay and there are probably good opportunities for those who understand how it all works. I was wrong.

I want to start from the beginning and learn everything. What are the best resources for this?

nilkn• 13 years ago

I learned most of what I know directly from the original paper: http://bitcoin.org/bitcoin.pdf

It's not too bad to read. Only the first six sections are really necessary to understand how it works.

oscilloscope• 13 years ago

Browsing Satoshi's mailing list and Bitcointalk posts is a good next step.

http://www.mail-archive.com/search?l=cryptography@metzdowd.c...

https://bitcointalk.org/index.php?action=profile;u=3;sa=show...

psc• 13 years ago

There are tons and tons of wiki and blog posts about bitcoin out there, but in my opinion the original paper is really good, if you have a technical background. I don't mean like crypto-expert, I think it's something the average programmer can read, maybe with a bit of googling. I usually wouldn't recommend a paper, but I found it really clear and straightforward. Maybe it's because I already understood bitcoin pretty well, but here it is if you want to take a look: http://bitcoin.org/bitcoin.pdf

The bitcoin wiki is also pretty good: https://en.bitcoin.it/wiki/Introduction

jnbiche• 13 years ago

If you're a programmer, I highly recommend trying to implement your own (toy) Bitcoin client -- just as a learning experience and not for general use or distribution. (Just be sure to advertise it as such if you put it up on Github). I've been involved with Bitcoin since early 2011 and am just now understanding the protocol in depth, having started to implement my own Bitcoin client.

You're best bet to do so is probably to just skip the reference client and its complex C++ implementation, and learn the protocol from the Python implementation [0], combined with the protocol specification on the Bitcoin wiki [1].

If Java is your thing, I've also heard good things about the readability of Bitcoinj, which is used for various Android Bitcoin clients. Just note that Bitcoinj implements SPV, which is not the full reference protocol. But it would still be a great start to learning about Bitcoin.

If you're not a programmer, there are a 101 different intro to Bitcoin sites. I think I've heard good things about the Khan Academy's intro videos, but I've never watched them myself. And yes, and Satoshi's original paper.

0. https://github.com/jgarzik/python-bitcoinlib

1. https://en.bitcoin.it/wiki/Protocol_specification

2. http://code.google.com/p/bitcoinj/

3. bitcoin.org/bitcoin.pdf

EDIT: s/legibility/readability

jonpaul• 13 years ago

I wrote a comprehensive article on addresses and how they work. I've even included the BitcoinJS JavaScript library on the page so that you can experiment and follow along. Here it is: http://procbits.com/2013/08/27/generating-a-bitcoin-address-...

ogig• 13 years ago

I see this kind of actitude from more and more people, seems to me the early adopters phase is about to end. Bitcoin is mainstream now.

I won't add more resources to the list others presented but i will +1 this suggestion: if programmer, code something bitcoin related.

crystaln• 13 years ago

Anyone care to analyze the vulnerabilities of having scripting embedded in a digital currency and bitcoin in particular? There must at least be some sort of scams that this enables.

oleganza• 13 years ago

In early version there was a bug with OP_RETURN operation allowing anyone to spend anyone's coins without effort. This was fixed quickly.

nayefc3• 13 years ago

"They overlook that the world functioned on fixed money supplies until 40 years ago (the gold standard)".

Classic example of why techies need to avoid talking economics.

freefrancisco• 13 years ago

Naval was an economics major in college besides being a techie, so he is certainly qualified to talk economics. You might not be aware that Keynes is not the last word on macroeconomics, read something by Ludwig Von Mises to round up your education.

nayefc3• 13 years ago

The issues that existed "until 40 years ago" were pretty obvious. I read a lot by Ludwig Von Mises. And I am not Keynesian.

nayefc3• 13 years ago

"The country [USA] that is the home to the Internet of Money could one day end up as the guardian of the new Reserve Currency and the Global Money Supply."

We all know how that went / is going when that country is controlling world politics.

Bitcoin – The Internet of Money

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