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Why Bitcoin CANNOT be Controlled by Government:

Here on the Daily Paul, I've read a lot of comments from Bitcoin skeptics who are (rightfully) curious how we Bitcoiners know government will not "step in and take control of Bitcoin." Stated very simply, they can't.

This statement, too, is met with skepticism since common knowledge tells us that EVERY technology can be hacked and commandeered. The nuance with Bitcoin is that it is both a currency technology AND a protocol.

A protocol in the technology world is like a language. It has a dictionary, grammar, and rules. If someone were to "take over" the English language and change a bunch of the words and rules, it ceases to be English. The same is true of Bitcoin.

Suppose someone didn't like one of Bitcoins rules, for example, the hard limit of 21M BTC. He could set out to re-write the Bitcoin protocol and begin generating coins. However, the coins created by this new protocol could not be spent on the Bitcoin network. To return to the language analogy, it would be like speaking Klingon to someone who's never even heard of Star Trek. They are simply incompatible.

So that's how Bitcoin as a Protocol protects it from being changed. But even if one agrees to all the rules, can it still be affected, seized, and controlled by government or a nefarious entity?

It's a bold claim to state that a technology is un-hackable, but by any reasonable measure, Bitcoin is exactly that. To understand how this is possible, you must also have an understanding of cryptography and mathematics.

When a user sends bitcoins to another user, he broadcasts it to every single user on the network. It's almost like a Tweet in that respect. (Don't worry, the users on each end of the transaction are only identified by their Bitcoin address - so long as the users haven't publicly disclosed their Bitcoin address, they may remain unidentifiable.)

With all the transactions going on, the Bitcoin network is very noisy. But there are users who are gathering all the transactions that are floating around into blocks. In order to validate that block of transactions, one has to audit that the users sending the Bitcoins actually have the coins to spend. This is where the Cryptography comes in.

The transactions are locked with a key that can ONLY be unlocked using guess-and-check. They CANNOT be revese engineered. (To understand how this is possible, see this video for a quick Cryptography 101: https://www.youtube.com/watch?v=3QnD2c4Xovk). So while the government may be "snooping" on your transactions, so is everybody else... and this is encouraged! (Remember, you are anonymous until you publicly disclose your Bitcoin address!)

The users who are working to create these blocks are ACTIVELY trying to guess-and-check these transaction blocks to ensure that they are valid transactions. In fact, they are in a race to do so! The user that is the quickest to find the solution to these blocks of transactions and publishes the result to the "Block Chain" receives a reward.

Now because the users are in a competition to audit the Block Chain, it becomes extraordinarily difficult to "control" Bitcoin transactions in any way. One must possess over half the power of the entire Bitcoin network! At present, this network already has over 10 times the hashing (decrypting) power of the world's most powerful super-computer, and it's increasing by the day. Building a government hack machine is already cost-prohibitive by any reasonable standards.

That doesn't mean that such a move isn't a concern to Bitcoin users. (It is.) The implications of such an attack have been calculated, and though an attacker couldn't replace any preceding transactions (steal your Bitcoins) one *could* falsify future transactions. Such an attack, however, would be very difficult and very costly to maintain. (As soon as the attack ended, the Bitcoin network would revert to its previous state. The attack would literally need to be carried out until the end of time.)

Most likely, users would see the attack coming and even those who are not active miners (like myself) would add their hashing power to the network to protect Bitcoin, or as a worst-cast scenario, switch to an alternate cyrptocurrency like Litecoin, which has many of the same properties as Bitcoin, but uses a different cryptographic algorithm (thus, requiring a new Hack Machine).

It is generally believed that these disaster scenarios have an *incredibly* small likelihood of occurring, much less being successful.

It is important that people new to Bitcoin know the risks before adopting, which why I included information about the ("51% attack"). I know full well that some of the skeptics will jump on and blindly state, "See? Bitcoin is hackable. DOA." I ask that these people pause before posting and consider their words with care. Bitcoin as it stands today is more secure than any bank, and it cannot be seized or intercepted by government. It is true ownership of one's purchasing power, and a viable alternative to FRNs.

PMs are still an important hedge, but unlike PMs, Bitcoin is being used and accepted as payment today! More and more websites and physical establishments are accepting Bitcoin every day. They are people who are sick of being told what they can and cannot buy/sell. They are people who are sick of having their money confiscated annually to fund other people's wars. They are people who want to OWN their purchasing power, and have taken that desire into their own hands.

Bitcoin is an extremely powerful technology. It circumvents the banks & government authority... and unlike PMs, it can be perfectly hidden, and is resistant to force.

I firmly believe that Bitcoin is how we can peacefully End the Fed.




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Please allow me to help y'all get started:

Please feel free to ask ANY questions!!!!

Here is a good rundown to start comprehending and using Bit Coins.

The Following 2 are great introductions:

This is a great forum:

www.bitcoinmoney.com/

This is a great pod cast:

www.omegataupodcast.net/2011/03/59-bitcoin-a-digital-decentr...

Services:

www.bitspend.net

www.bitpay.com

www.bitinstant.com

www.localbitcoins.com

Some sites:

www.bitcoinmagazine.com

www.weusecoins.com

www.coinbase.com

www.bitcoincharts.com

www.mtgox.com

www.elbitcoin.org

The software options:

www.multibit.org

www.bitcoinarmory.com

www.bitcoin.org (known as QT - it is the original software)

www.electrum.org

www.blockchain.info

www.strongcoin.com

www.coinbase.com

I would recommend you choose any of these to get started aside from Qt and bit coin armory. This is because they are the hardest work with as a newbie to use. Armory builds on top of Qt. if you're really computer savvy I say go for it otherwise use any of the others. Read what each service has to offer and choose your favorite.

The best investment you can make is to educate yourself on how public key encryption works and how bitcoins works. Remember that silver right now is at an amazing price.

Peace!

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

Thank you

Thank you for being open-minded to Bitcoin despite being skeptical. It took me a long time to understand Bitcoin to the level that I currently, and there's STILL MORE I don't fully understand!

For Liberty!

The government can't control

The government can't control Bitcoin but it can enact "regulations" whether legally or illegally and control information flow (i.e., internet) that render it practically useless.

Someone mentioned shutting down the internet... yeah you can use it without the internet but how many people are going to do that? Bitcoin would first have to be readily established prior to any "take-over" attempt to provide any resilience to an internet/power rationing/restricted use.

Like the Defense Distributed thinks that everyone can now have an AR15 because the file is "forever" on the internet" - assuming we will always have the internet.

P2P-Nets

P2P-Nets will eventually be the norm: users who connect directly to each other instead of to some third-party ISP who is regulated by the government. The users create a point-to-point (or "mesh" network) that is cheap, efficient, and 100% unstoppable by government.

Unfortunately, mesh networks are a solid 10 years away, so we'll have to rely on the darknet/TOR until then.

Assuming we don't fall into a

Assuming we don't fall into a 50 year dictatorship. It is stoppable if you are not allowed to have power and they monitor neighborhoods for networks.

Writings of Satoshi

This is written by Satoshi the creator of Bitcoins.

Yes, [we will not find a solution to political problems in cryptography,] but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.

The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
A generation ago, multi-user time-sharing computer systems had a similar problem. Before strong encryption, users had to rely on password protection to secure their files, placing trust in the system administrator to keep their information private. Privacy could always be overridden by the admin based on his judgment call weighing the principle of privacy against other concerns, or at the behest of his superiors. Then strong encryption became available to the masses, and trust was no longer required. Data could be secured in a way that was physically impossible for others to access, no matter for what reason, no matter how good the excuse, no matter what.
It's time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.

2 things:

1. The government can just shut the internet down rendering digital coinage completely useless (eventually).

2. It is just creating what the government wants anyhow. It is creating a type of 'credit' system that is in a way a universal money system (any digital money can be manipulated even if backed by real coins). The only difference is that it's not monopolized by the government. That is the only thing I see as good about it.

Isaiah 2:4
And he shall judge among the nations, and shall rebuke many people: and they shall beat their swords into plowshares, and their spears into pruning hooks: nation shall not lift up sword against nation, neither shall they learn war any more.

Bitcoins =/= the Internet

1) Bitcoins do not *require* the internet. The internet certainly makes Bitcoin easier to use, but it will work just the same on any P2P network. Such networks are not affected by a gov't kill-switch.

2) Your comment that "any digital money can be manipulated even if backed by real coins" shows that you did not read the above article. Unless you're talking about Fractional Reserve Banking, which is not possible with Bitcoin. Well, I mean, I guess it's "possible," but bitcoin makes banks irrelevant... Who's going to put their money in a bank, where they loan out 90% of it, when there's no need to earn interest (no inflation) or protect your money in a safe?

You think ALL governments

You think ALL governments would be able to agree to simultaneously shut down the Internet? Not likely.

I can only hope

you are right

Isaiah 2:4
And he shall judge among the nations, and shall rebuke many people: and they shall beat their swords into plowshares, and their spears into pruning hooks: nation shall not lift up sword against nation, neither shall they learn war any more.

all you have to do is shut

all you have to do is shut down the grid.

Again, that's just not

Again, that's just not possible. The US does not have a so-called "smart grid", rather power is delivered by many independent and interdependent providers.

they may not

have a 'kill switch' but they are infiltrating internet service providers. The only reason they don't force it through, like taking our guns immediately, is because they want to make it 'seem' lawful somehow so that most people will go quietly.

Isaiah 2:4
And he shall judge among the nations, and shall rebuke many people: and they shall beat their swords into plowshares, and their spears into pruning hooks: nation shall not lift up sword against nation, neither shall they learn war any more.

Still on the fence over bitcoins.I need 3 questions answered.

If bitcoin is considered money laundering by our mighty rulers and made illegal or closely monitored,wouldn't that basically destroy it as a currency since most merchants will not accept them as payment?

Isn't the primary purpose of bitcoin to trade for real goods,so without any actual merchants accepting bitcoins for goods,then isn't it basically useless and worthless?

If you don't have the ability to mine them,how the hell do you get them?

Thanks

"Grey Markets"

Bitcoin has established itself as the currency of black markets and I don't think that will ever change. What will continue to be a boon for Bitcoin, however, are the "grey markets" which are legal goods sold outside normal distribution channels.

Junk food, soda, cigarettes, fossil fuels...

Grey Markets for these things will exist because government taxes the bejeesus out of them. By doing this, gov't accidentally helps Bitcoin adoption. And you don't think gov't is going to stop "sin taxes" anytime soon, do you?

It'll only be a matter of time before there are enough people who see that they are being robbed blind by using "their" money, and will PREFER accepting something else.

My personal question has to

My personal question has to do with fractions a Bitcoin. How is a Bitcoin partial determined and distributed?

Also, clearly the US government is going to go after the Bitcoin exchanges, not the anonymous users.

Fungible

To think of Bitcoin as an actual coin is a bit of a misnomer. A bitcoin is divisible down to 8 decimal places, and like PayPal, your total holdings are aggregated automatically. You never need to make change for a BTC ;)

When Bitcoin hits $1000 a coin

and people are sure that no more bitcoins are "printed" (mined), there will be no circulations of bitcons rather than for illegal activities. People will expect value of other FIAT to fall and bitcoins to rise - thus, people will keep bitcoins for resell at later day.

With low bitcoin circulation, the tension and anxiety will be on the market price. Then few big holders of bitcoins decide to cash in (say for personal reasons.) Bitcoin price will drop, panic will spread and the deal will be over. The ironic part is that government will step in and confiscate money from those who cashed in by selling first (the gov will come up with some laws violating "fair trade.")

Very well stated, sir.

I've been studying bitcoins since 2010 and I haven't heard a better approximation of bitcoin security before this one. Bravo.

To all Libertarians who do not yet own any 'coin:

The price is rising fast and one day you will DEEPLY regret your hesitancy. Bitcoin and other Peer-to-peer technologies is where ALL our hopes lie in fighting oppressive governments, worldwide.

When Bitcoin hits $1000 a coin, (which it will) you'll regret not buying it now at this pathetically low price of only $75.

When Bitcoin is made Illegal, you'll pay that anyway... Because we must fight.

HONEST RON 2012!
LEGALIZE LIBERTY!

Bitcoin is based purely on

Bitcoin is based purely on confidence. The coins have no physical properties, or genuine use. The system is also entirely reliant on the internet. No internet, no bitcoins.

So are FRN's the difference

So are FRN's the difference is FRN's are centrally controlled and created. No internet and FRN's become worthless too as the majority of transactions are now in the internet. However bitcoins can be saved on thumb drives try that with an FRN.

It cracks me up people poo poo bitcoins a free market currency and yet stay with centrally controlled fiat currency that assures theft force and coercion of their money and substance that will crash soon anyways... Makes no sense to me...

-----
End The Fat
70 pounds lost and counting! Get in shape for the revolution!

Get Prepared!

Completely the opposite,

Completely the opposite, hawkiye, of what you say is true. If the FRN's that transfer electronically were for whatever reason unable to be transferred, the paper FRN's would become far more market valuable (price). Prices would plummet as only paper currency would be bidding for goods.

Of course it would because

Of course it would because digital FRN's are the major source of money creation the paper currency is just the petty cash of the system these days. it would crash the economy into major depression yes because the money supply would shrink literally overnight but the trillions.

That changes nothing your concern was bitcoin relies on the internet point as so do FRN's. If it goes down an all that is left is paper you are dreaming if you think it will buy you a a fart in the wind. Gold and silver will become the currency when that happens.

In the meantime if since both FRN's and Bitcoins are digital Bitcoin is far superior as as it is not traceable artificially inflatable or taxable and beyond government control. The choice is really s no brainer for those who love freedom and liberty.

-----
End The Fat
70 pounds lost and counting! Get in shape for the revolution!

Get Prepared!

If the powers that be simply

If the powers that be simply shut off the internet, the phone system would likely keep the FRN's moving. Bitcoin on the other hand would be gone.

If the digital FRN's were gone, and the US government still held power, paper FRN's would be used, and they would be worth much, much more because of the deflation. Yes, there would be immense hardship for those who don't have any paper currency, but for those with paper currency, they'd have many multiples their current purchasing power.

This makes sense for the bankers, who would be able to buy everything dirt cheap.

It doesn't take the internet being taken away entirely to shut down Bitcoin either, Internet 2.0, which is on its way, could do the job too. The powers that be could let you connect only to certain other computers. A p2p network would not be possible under those conditions.

Bitcoin is a bad idea, championed by those who don't know any better.

LOL! You need to do some

LOL! You need to do some research friend. First bitcoins are transacted on phones all the time. They do not need the internet. The internet makes it convenient is all just like it makes it convenient for FRN's. Second p2p does not need the internet either and that is where we are heading anyways. In fact it is to late already P2p networks are growing and being refined. Soon you will not need an ISP you will be able to access the world wide p2p net free with no 3rd party controlling your access. TPTB are losing their grip they can't shut down or control a p2p network. Do some research as you are repeating propaganda.

FRN's are on borrowed time and if they stop digitally transacting the paper ones will be worthless. They are based on confidence also not any intrinsic value and the are highly inflated which can't happen to bitcoins.

-----
End The Fat
70 pounds lost and counting! Get in shape for the revolution!

Get Prepared!

Sorry, but you're wrong.

Sorry, but you're wrong. You've got your terms confused. You can have a p2p version of the World Wide Web (DNS) running on the Internet, but you can't create an actual p2p internet, at least not with the hardware most people have. Your cable modem can't connect to another persons cable modem -- hell, most people only get one choice of ISP. If you want an ACTUAL p2p internet you're looking at telephony modem connections, and at that point it isn't really feasible... what with the constant dailing and disconnecting. Get "p2p internet" out of your head. It isn't happening.

You say bitcoins are transacted via telephone... but without the internet, no updates to the Bitcoin network are possible.

Let me make it clear to you, the powers that be could if they wanted to, completely turn off all p2p traffic, as well as all traffic that they disapprove of through the ISP, at any time. It would be a simple matter of stopping connections to your computer, except for those websites deemed acceptable by the government.

You are also WRONG about FRN's. They have no intrinsic value to be sure, but they have government backing, and are in wide circulation.

You have no clue what you are

You have no clue what you are talking about! Telephony and modems LOL! What is this the 80's? Dude land lines are a dying breed.

I have been monitoring a p2p internet project for several years called netsukuku it is a wireless mesh that connects p2p with software that can be run on any computer or a router. Each computer becomes a node. It is the future. There are at least two other similar projects. They all have working prototypes and it is just a matter of time before they break out and go viral. ISP's will be obsolete once that happens.

-----
End The Fat
70 pounds lost and counting! Get in shape for the revolution!

Get Prepared!

Technology like that isn't

Technology like that isn't currently available, and whether it works with many devices connected is unknown. These are theoretical networks, not actual networks; the whole thing is a theory. Don't get me wrong, it's interesting, but it isn't really "there yet", is it?

If the internet was turned off tomorrow, those who own bitcoins would be out in the cold. There is no getting past that. I'm not in favor of FRNs, not at all, but at the very least paper FRNs have a physical form.

I'd prefer people buy gold, and silver. Bitcoin is a currency, same as the FRN, not a government enforced currency, but still a currency. There is a real moral difference between money and currency. Money has real, intrinsic value. When you exchange silver for bread, for instance, you have exchanged value for value. When you exchange currency for bread, you have gotten something for nothing.

What part of they have a

What part of they have a working prototype mesh do you not understand? And if the dollar crashed to tomorrow those with FRN's would be out in the cold... Sigh

There is nothing wrong with putting away gold and silver I recommend it too but you cannot go and buy anything with it right now for the most part. You have to physically convert it to FRN's. You can buy things with BC or convert them in minutes.

If you are so concerned with morality then why do you use immoral FRN's?

When you exchange FRN's for bread that is something for nothing because of artificial inflation. When you exchange bitcoins for bread bitcoins represent your labor for trade so its not something for nothing. You use an immoral currency for transactions right now why not use a currency that protects your liberty instead...

But I digress if you want to continue with a centrally controlled fiat currency that assures theft force and coercion of your money substance and privacy that will crash soon anyways rather then a free market currency that cannot be traced, taxed artificially inflated, or controlled by government be my guest... Put that in your moral pipe and smoke it... Sigh!

-----
End The Fat
70 pounds lost and counting! Get in shape for the revolution!

Get Prepared!

What part of "with many

What part of "with many devices" do you not understand? It may work small time, but when the network has to route billions of devices, that is when things get dicey. The official project website states that they don't know if it will work.

I'm a coder, I can see the "cool factor", but this is an unproven theory.

Bitcoin doesn't represent human labor, it represents clock cycles. Are other people supposed to say "you spent clock cycles on that, so I'll reward you"? Some currencies represent real labor, but even then, what makes them technically different from FRN? Sure, someone had to work for it, rather than simply decide to create it, but in the end they were both just printed.

What can you do with a Bitcoin besides sell it? Nothing. It has no genuine use. They have no physical properties; they're not wealth. You are just as much trading nothing when you trade a Bitcoin as when you trade an FRN.