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What about Western Union?
If I can use my W.U. online account to send money to someone in China, who then picks up in cash, they've clearly addressed the fraud charge-back thing (I think they ring you to confirm the transaction). Could CoinCard use WU instead?
If I can use my W.U. online account to send money to someone in China, who then picks up in cash, they've clearly addressed the fraud charge-back thing (I think they ring you to confirm the transaction). Could CoinCard use WU instead?
Re: Whenver someone sends me some bitcoins it says its from unknown...
Absolutely, and if you were using BitCoin for primarily things that could get a search warrant issued, you'd take steps to protect your anonymity. However, BTC is not some currency designed for those kinds of activities any more than Google was designed to promote file sharing by indexing .torrent files. When buying online I generally use my real name (so I can sign for it or have it delivered to work), I HAVE to use my real address (or work address), and the Tor network is too slow to bother with regular purchases.
If at any point in the past or future I wanted to buy the eBook "Is My Wife Cheating On Me" and was worried my political opponents would use it against me, the address I used above could be used to link my BitCoin address to me. And because you have to spend money with the same address with which it was received, it's all too easy to accidently spend money that's tied to your ID.
In other words, have two wallets! One that is ONLY used for anonymous activity.
If at any point in the past or future I wanted to buy the eBook "Is My Wife Cheating On Me" and was worried my political opponents would use it against me, the address I used above could be used to link my BitCoin address to me. And because you have to spend money with the same address with which it was received, it's all too easy to accidently spend money that's tied to your ID.
In other words, have two wallets! One that is ONLY used for anonymous activity.
Re: Whenver someone sends me some bitcoins it says its from unknown...
Okay, but your client keeps a record of the addresses you have sent from? And your counter-party client keeps a record of addresses they've received at?
So to prove you transacted with said counter-party, authorities would need access to both to and from clients? (The wallet.dat x2?).
So to prove you transacted with said counter-party, authorities would need access to both to and from clients? (The wallet.dat x2?).
Not necessarily. Say at some point you purchased a DVD from an eCommerce provider who was also selling pirated software and got all his servers seized. In his transaction list would be:
SALE LEGIT_DVD 25BTC Your name Your address Date/Time
Or whatever, so they know at a given time you sent 25BTC to that provider. They can then look on the block explorer and see a 25BTC transaction at that exact moment from one of your bitcoin addresses to the site's bitcoin address, and "the man" how now tied your real name to your bitcoin address. Now all transactions in the block explorer with that address might as well have your real name.
https://en.bitcoin.it/wiki/Anonymity
Originally there was a strong motivation to have mining enabled, as the cpu requirements to generate a block (and thus win the 50BTC+fees bounty) were minimal. These days, there's SO many computers out there mining (and using custom mining tools that use the GPU instead of CPU which is far more efficient) that on my 3-year-old PC the average time between block generations using the native client is some 1500 days! Even with a GPU miner it worked out to be 1 block every 120 days.
If you've got a reasonably new PC, run a GPU miner and connect to a mining pool, you may find that you can mine a few hundred coins per year in the background and that's certainly worth it to enough people that some of the mining pools out there are doing over 100Ghps. By comparison my GPU was doing 27mhps, and my cpu was doing 4!
If you've got a reasonably new PC, run a GPU miner and connect to a mining pool, you may find that you can mine a few hundred coins per year in the background and that's certainly worth it to enough people that some of the mining pools out there are doing over 100Ghps. By comparison my GPU was doing 27mhps, and my cpu was doing 4!
Fair points, but I'm not sure goatpig's is detailed enough to be convincing. As someone who didn't know about BitCoin, i'd be thinking "Why? What's wrong with PayPal?". There at least needs to be a link to the we use coins video.
Re: There is 20 times as much mBTC as there is currency in EU circulation
Even with 64-bit integers you have 20 decimal digits to play with, and the current implementation only uses 16 (8 digits before the decimal, 8 digits after), so the .01 uBTC precision limit must be a design decision not a datatype limitation.
There is 20 times as much mBTC as there is currency in EU circulation
Just some interesting math: the possible range of BTC values is between 0.00000001 to 21,000,000 (https://en.bitcoin.it/wiki/PHP_developer_intro#Precision).
In theory if BTC becomes popular enough (and thus increasingly valuable, thanks to a fixed maximum) it will be traded in uBTC (0.000001), so people would treat uBTC as "dollars", and that still leaves two decimal places for cents, i.e. you'd be buying things for 123.45 uBTC. In uBTC, with the maximum value of 21,000,000BTC, there's an in-built currency limit of
21,000,000,000,000.00 uBTC.
By comparison, there is currently 1035.2 billion USD in circulation in the EU (http://en.wikipedia.org/wiki/Circulation_(currency) ), which is:
1,035,200,000,000.00 USD
So if necessary there is 20 times more uBTC than there is money currently in circulation in the EU.
EDIT - changed mBTC to uBTC
In theory if BTC becomes popular enough (and thus increasingly valuable, thanks to a fixed maximum) it will be traded in uBTC (0.000001), so people would treat uBTC as "dollars", and that still leaves two decimal places for cents, i.e. you'd be buying things for 123.45 uBTC. In uBTC, with the maximum value of 21,000,000BTC, there's an in-built currency limit of
21,000,000,000,000.00 uBTC.
By comparison, there is currently 1035.2 billion USD in circulation in the EU (http://en.wikipedia.org/wiki/Circulation_(currency) ), which is:
1,035,200,000,000.00 USD
So if necessary there is 20 times more uBTC than there is money currently in circulation in the EU.
EDIT - changed mBTC to uBTC
Given I recently learned that CoinCard converts BitCoin into PayPal (not into gift cards like I initially thought), I really think BitCoin is ready for eCommerce providers to embrace. Below is a draft email I plan on sending to some of my usual eCommerce shops, can anyone give some feedback?
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Hi Guys,
Thanks for filling my order so quickly, as always it's a pleasure purchasing from you. I thought I'd take the opportunity to let you know about this new technology called BitCoin that you might be interested in.
As you may know, recently VISA, MasterCard and PayPal began refusing to process donations to WikiLeaks effectively blocking anyones ability to donate, even though WikiLeaks had broken no law. Regardless of your moral position on WikiLeaks, the ease with which these large companies can at whim control who I can send money to is a little scary. On top of that, I understand that credit card merchants have a policy of reversing transactions first and asking questions later, leaving shop owners such as yourself holding the bag in the event that a fraudulent credit card is used, and PayPal (which offers not so much as a phone number) has taken to freezing accounts with too many chargebacks. In response to these concerns, a distributed, worldwide, internet-based cash-like currency is gaining traction called BitCoin. Other than the ideological benefits, BitCoin transactions are non-reversable (so you'll never get a credit card chargeback) and the transaction fees are in the order of 1 cent, which makes it very attractive to shop owners.
Perhaps more importantly, accepting BitCoin will get your site listed on the "list of sites that accept BitCoin (https://en.bitcoin.it/wiki/Trade)", which helps to increase your Google ranking (since the more sites linking to yours the better) and will hopefully get you some additional business from the growing number of users that have BitCoins to spend.
There is an excellent video on the front page of http://www.weusecoins.com/ if you'd like more information on how BitCoin works.
For simplicity, BitCoin can be added to your site in the same way that you currently handle bank deposits: the client claims that they've paid you by placing an order and you simly periodically check your BitCoin account to confirm and mark any BitCoin transaction as paid. If your really wanted to automate the process, there is a guide available for your web developer here https://en.bitcoin.it/wiki/PHP_developer_intro, but that might be a bit of overkill to start with.
Once you've accepted BitCoins for products or services, you can convert them into your usual currency using an exchange (matches buyers and sellers of BitCoins, much like a normal currency exchange), or perhaps more conveniently for shop owners using a site such as CoinCard (http://coincard.ndrix.com) which will instantly convert BitCoins into a deposit at your PayPal account (1% fee + $1 paid to CoinCard and PayPal charges you no fees for PayPal->PayPal). You can then deposit your PayPal balance directly into your bank account at no fee. I know it's a little ironic to use PayPal to sell BitCoins when BitCoin is specifically designed to avoid centralised services such as PayPal, but as the currency grows in popularity you will see direct BitCoin->Bank Deposit services in major countries to start popping up so PayPal is really just a stop gap while BitCoin use grows.
If you have any questions, feel free to email me as I have a pretty good technical understanding of how it all works.
Kind regards,
Sverre
Thanks for filling my order so quickly, as always it's a pleasure purchasing from you. I thought I'd take the opportunity to let you know about this new technology called BitCoin that you might be interested in.
As you may know, recently VISA, MasterCard and PayPal began refusing to process donations to WikiLeaks effectively blocking anyones ability to donate, even though WikiLeaks had broken no law. Regardless of your moral position on WikiLeaks, the ease with which these large companies can at whim control who I can send money to is a little scary. On top of that, I understand that credit card merchants have a policy of reversing transactions first and asking questions later, leaving shop owners such as yourself holding the bag in the event that a fraudulent credit card is used, and PayPal (which offers not so much as a phone number) has taken to freezing accounts with too many chargebacks. In response to these concerns, a distributed, worldwide, internet-based cash-like currency is gaining traction called BitCoin. Other than the ideological benefits, BitCoin transactions are non-reversable (so you'll never get a credit card chargeback) and the transaction fees are in the order of 1 cent, which makes it very attractive to shop owners.
Perhaps more importantly, accepting BitCoin will get your site listed on the "list of sites that accept BitCoin (https://en.bitcoin.it/wiki/Trade)", which helps to increase your Google ranking (since the more sites linking to yours the better) and will hopefully get you some additional business from the growing number of users that have BitCoins to spend.
There is an excellent video on the front page of http://www.weusecoins.com/ if you'd like more information on how BitCoin works.
For simplicity, BitCoin can be added to your site in the same way that you currently handle bank deposits: the client claims that they've paid you by placing an order and you simly periodically check your BitCoin account to confirm and mark any BitCoin transaction as paid. If your really wanted to automate the process, there is a guide available for your web developer here https://en.bitcoin.it/wiki/PHP_developer_intro, but that might be a bit of overkill to start with.
Once you've accepted BitCoins for products or services, you can convert them into your usual currency using an exchange (matches buyers and sellers of BitCoins, much like a normal currency exchange), or perhaps more conveniently for shop owners using a site such as CoinCard (http://coincard.ndrix.com) which will instantly convert BitCoins into a deposit at your PayPal account (1% fee + $1 paid to CoinCard and PayPal charges you no fees for PayPal->PayPal). You can then deposit your PayPal balance directly into your bank account at no fee. I know it's a little ironic to use PayPal to sell BitCoins when BitCoin is specifically designed to avoid centralised services such as PayPal, but as the currency grows in popularity you will see direct BitCoin->Bank Deposit services in major countries to start popping up so PayPal is really just a stop gap while BitCoin use grows.
If you have any questions, feel free to email me as I have a pretty good technical understanding of how it all works.
Kind regards,
Sverre
Now dont I feel silly! Where it says 'select your gift card type' I didn't notice paypal payment was in there, I thought it was selling gift cards.
I will now finish my email to this ecommerce vendor!
I will now finish my email to this ecommerce vendor!
Wow that's an excellent level of thought you've put into it.
As a director for a small company (6 of us in total) doing web programming, custom databases, on-site tech support and so on, I've got access to some decent programming experience. I myself have quite a bit of experience dealing with tax issues (I'm not an accountant, but I make a point of knowing the ins and outs of GST law and so on), setting up trusts (not trust accounts, the corporate entity), registering companies and so on. I'll PM you my details and if there's anything I can do to help let me know.
As a director for a small company (6 of us in total) doing web programming, custom databases, on-site tech support and so on, I've got access to some decent programming experience. I myself have quite a bit of experience dealing with tax issues (I'm not an accountant, but I make a point of knowing the ins and outs of GST law and so on), setting up trusts (not trust accounts, the corporate entity), registering companies and so on. I'll PM you my details and if there's anything I can do to help let me know.
What about you implement such a service?
In theory I could, but I would need to program a system that allows people to lodge transfers online, integrates with the BitCoin system, links in somehow to PayPal's API (do they even have one for this sort of thing?), and then also implement the selling of BitCoins system so I didn't end up with a huge stack of BitCoins and no money. I've got a little PHP experience but this is way beyond my ability. Then there's the risk that BitCoins will decrease in value between my buying them and people buying them from me. Surely some of the existing BitCoin players would be better equipped to offer such a service?
Hardly! You try telling a business that it has to convert it's BitCoins into VISA cards and then can only use them for online purchases. How do you pay wages with a VISA card?? Bitcoin is a currency, not FlyBuy points!
So I started writing an email to an eCommerce site in Australia that I use a bit, encouraging them to accept BTC for payment. I got to the paragraph that starts "Once you've accepted BitCoins, you can convert them into AUD by" and then got stuck.
From what I gather, the process is something like this (!):
Create sell orders on MtGox until you have all your BTC in USD on the Mt Gox site (minimum $800). Do a withdraw funds on Mt Gox of your USD to put them into Liberty Reserve (1% fee). Use a third party exchange like m-gold.com to have the Liberty Reserve balance transferred into your bank account ($35 fee).
Seriously!? No wonder it's hard to get eCommerce sites to adopt BitCoin!
Is there no BitCoin2PayPal, where you send BitCoins to a BitCoin address, wait for a confirmation and around 10 minutes later the money is PayPal'd to you? Yes I know it's ironic to use PayPal, but until someone starts BitCoin2AUD (plus another for every other country) that's surely the easiest stop gap that gives every country in the world relatively easy access to BitCoin.
From what I gather, the process is something like this (!):
Create sell orders on MtGox until you have all your BTC in USD on the Mt Gox site (minimum $800). Do a withdraw funds on Mt Gox of your USD to put them into Liberty Reserve (1% fee). Use a third party exchange like m-gold.com to have the Liberty Reserve balance transferred into your bank account ($35 fee).
Seriously!? No wonder it's hard to get eCommerce sites to adopt BitCoin!
Is there no BitCoin2PayPal, where you send BitCoins to a BitCoin address, wait for a confirmation and around 10 minutes later the money is PayPal'd to you? Yes I know it's ironic to use PayPal, but until someone starts BitCoin2AUD (plus another for every other country) that's surely the easiest stop gap that gives every country in the world relatively easy access to BitCoin.
If a bunch of people did this it would basically be a leverage fueled price bubble in bitcoin, it would undermine bitcoin as much as it would the banks in the long run.
Exactly. The bitcoin economy would come crashing down as soon as people started buying back their fiat money to pay for things. For the bitcoin economy to really flourish we need to have as closed a system as possible.
The OP is talking about loan fraud, with a goal of destroying the existing banking system, and using BitCoin as a replacement for cash. While the conversation progressed to whether BitCoin can be used to live off-grid, I think the point is that in this scenario BitCoin holds no additional benefits beyond normal cash. Loaning money from a bank and defaulting on it will get your assets potentially seized, and "the man" can't seize well hidden cash any better than BitCoin. The loan fraudster might as well use cash.
Certainly if a bunch of misguided people THOUGHT that BTC offered benefits over cash when performing loan fraud, that might cause them to all simultaneously buy BTC, which would drive the price of BTC up. Then when they all simultaneously sold out of the market the price would go back down to what it was before. It may cause some larger fluctuations in the price of BTC than normal, but ultimately the economy wouldn't come "crashing down".
Even if BTC devalued so that 1BTC was worth just 1c, the position of the decimal point relative to fiat currency makes no difference to the BitCoin system. Your $100USD would buy more BTC now, but then you'd spend more BTC buying things with it. A devaluing currency hurts those holding it, but only by the EXACT amount it helped when it was increasing in value. It's a zero sum game.
Re: The risk of the double spend (or why we don't need to wait for confirmations)
How much of a GPU would you need for this to be practical?
Doesn't really matter. What you would have to do to attempt a Finney attack is have a script that can spend your coins the instant that you find a block, withhold that block for half a second, and then hope that no one else solved that same block within that half second. Faster hashing just means that you don't have to wait as long to try it.
That's just it though. If you can rip off an eCommerce provider by 300BTC (10 * 30 BTC transactions) every 30 minutes because your GPU is capable of some 33% of the entire hashing power of the network, that's worth the effort. If you can rip off an eCommerce provider by 300BTC once every 6 months then it's no longer worth it, so I think hashing power is critical in the practicality of this attack.
Re: The risk of the double spend (or why we don't need to wait for confirmations)
How much of a GPU would you need for this to be practical? My PC is 3 years old, and my GPU mining efforts showed approximately 120 days between finding blocks! Even at 7 days per block (I guess some high end consumer GPUs could do that?), how much would need to be spent in a double spend attack to make it worthwhile?
Presumably it wouldn't be worth it for a 10c transaction, and impossible with a 10,000BTC transaction (as the seller would wait for confirmations), so I wonder what is considered a "safe" value below which you might as well take zero confirmations as "good enough" considering the difficulty of launching a Finney attack.
Or would we expect to see botnets finding blocks, meaning the time between launching double spends could be as little as one every 20-30 minutes (approximate time between blocks for something like mining.bitcoin.cz), and that's what the main problem is?
Presumably it wouldn't be worth it for a 10c transaction, and impossible with a 10,000BTC transaction (as the seller would wait for confirmations), so I wonder what is considered a "safe" value below which you might as well take zero confirmations as "good enough" considering the difficulty of launching a Finney attack.
Or would we expect to see botnets finding blocks, meaning the time between launching double spends could be as little as one every 20-30 minutes (approximate time between blocks for something like mining.bitcoin.cz), and that's what the main problem is?
The risk of the double spend (or why we don't need to wait for confirmations)
This is a follow on from other threads: http://bitcointalk.org/index.php?topic=1994.0 and http://bitcointalk.org/index.php?topic=3441.0 and http://bitcointalk.org/index.php?topic=423.0
Specifically, I want to limit this discussion to the CURRENT implementation: no suggestions on how to make BitCoin better, no suggestions working around what might not even be a "problem". I just want to know:
In the current implementation, what are the circumstances that would need to be created that might leave someone out of pocket, if they accepted transactions without waiting for confirmation? Here's my understanding based on reading the other threads and the wiki, but if someone could confirm that would be great.
Attacker has some bitcoins, and is connected directly to the nodes of the eCommerce sites he's attacking, one in Chile and one in Mongolia. At almost exactly the same time, his modified client directly sends Transaction A to Chile node and Transaction B to Mongolia node, so each of those respective clients see the transaction as unconfirmed.
The two nodes start propagating, and we're now 100ms in. Because of normal lag and so on, transaction A propagates to 40% of the network, transaction B to 20% of the network, and no nodes have yet detected a double spend. At 110ms in, a node in Africa (which has already received transaction A) also receives transaction B, and considers it invalid, thus not propagating it. By 300ms in, every node has received both transactions but 70% of the nodes accepted transaction A (considering transaction B to be invalid) and 30% of the nodes accepted transaction B (considering transaction A to be invalid).
But both the Chile and the Mongolia nodes both say they have received the money.
After 15 minutes, a new block is generated within the 30% of the nodes thus including transaction B and excluding transaction A. The new block propagates around all the nodes, causing the Chile node to drop the received money transaction (this shows up in the client as something or does it just vanish?), while the Mongolia node carries on as if nothing had happened.
Is this how it works in the current implementation? For 15 minutes, or however long it takes for the next block to arrive, both eCommerce sites will think they've received the money?
Specifically, I want to limit this discussion to the CURRENT implementation: no suggestions on how to make BitCoin better, no suggestions working around what might not even be a "problem". I just want to know:
In the current implementation, what are the circumstances that would need to be created that might leave someone out of pocket, if they accepted transactions without waiting for confirmation? Here's my understanding based on reading the other threads and the wiki, but if someone could confirm that would be great.
Attacker has some bitcoins, and is connected directly to the nodes of the eCommerce sites he's attacking, one in Chile and one in Mongolia. At almost exactly the same time, his modified client directly sends Transaction A to Chile node and Transaction B to Mongolia node, so each of those respective clients see the transaction as unconfirmed.
The two nodes start propagating, and we're now 100ms in. Because of normal lag and so on, transaction A propagates to 40% of the network, transaction B to 20% of the network, and no nodes have yet detected a double spend. At 110ms in, a node in Africa (which has already received transaction A) also receives transaction B, and considers it invalid, thus not propagating it. By 300ms in, every node has received both transactions but 70% of the nodes accepted transaction A (considering transaction B to be invalid) and 30% of the nodes accepted transaction B (considering transaction A to be invalid).
But both the Chile and the Mongolia nodes both say they have received the money.
After 15 minutes, a new block is generated within the 30% of the nodes thus including transaction B and excluding transaction A. The new block propagates around all the nodes, causing the Chile node to drop the received money transaction (this shows up in the client as something or does it just vanish?), while the Mongolia node carries on as if nothing had happened.
Is this how it works in the current implementation? For 15 minutes, or however long it takes for the next block to arrive, both eCommerce sites will think they've received the money?
Something like http://www.feralhosting.com would be awesome, their Helium-2 slot is 333GB disk space, 1Gbps down, 100Mbps up, 1TB of upload, 15 minute setup, for £10. Just wish they accepted BTC.
You could, in theory, do exactly the same with cash. Get $10,000 credit card, go to ATM's over the next 10 days withdrawing the maximum amount ($1000) as a cash advance in USD, default on the loan and have $10,000 in USD cash. Of course you'd ruin your credit rating, probably be made bankrupt by the bank, the govt may even seize any assets in your name (house, car etc) as part of the bankruptcy proceedings.
Only assuming BTC is increasing in value, which it has been, but then again so has the stock market over the last few months. But like any investment, whether it's shares or international currency or BTC or property, investments can go up as easily as they can go down.
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How much would you have made if you purchased bitcoins 6 months ago using a credit card. You wouldnt need to default .
Only assuming BTC is increasing in value, which it has been, but then again so has the stock market over the last few months. But like any investment, whether it's shares or international currency or BTC or property, investments can go up as easily as they can go down.