Some might say that the NSA hacked the internet (or at least cell phone networks, which aren’t all that different). You might argue that they merely “used the internet,” and didn’t “hack it,” but what they did do is undermine some basic assumptions about what is observable and not about data passing back and forth. One can argue about the semantics of hacking, but from the perspective of an ordinary user, it was effectively hacked to reveal who is calling whom and who is watching what.
We may change the assumptions about what goes on when we use the internet or bitcoin or our cell phones, and that isn’t a bad thing, but we should assume that our bitcoin holdings aren’t quite as secure as we though they were.
I don’t know enough about how bitcoin encryption works and how things are stored, but I do know that virtually every promise from IT professionals that something can’t be hacked seems to fail with enough determination and processing power.
But the NSA hacked (or rather “gathered”) data from providers(PRISM) and they spied on computers and servers. Much of that took place on the Internet, but the NSA didn’t actually do anything to the Internet because that’s not really possible. It’s kind of a head scratcher.
Edit: Also, to keep your btc (and other stuff you don’t want anyone else to see) safe, use Truecrypt. Even the NSA can’t get passed it. There are legal disputes going on right now deciding if you can force a person to reveal their Truecrypt password. On one side you could plead the 5th. On the other, there’s absolutely no way for the authorities to gain access to your folder/flash drive/HD if it’s encrypted with Truecrypt. Ask your IT friends about that and they’ll tell you it’s freaking awesome.
Unfortunately, we can’t separate security of the currency and the system in which the currency lives. Bitcoin itself might be secure, but it also needs exchanges that mainstream people can trust. Otherwise, the currency cannot reasonably expand beyond niche users. I am sure some highly specialized people know enough about BitCoin to keep out of trouble. However, when even nerds like bchad can say “I don’t know enough about how bitcoin encryption works and how things are stored”, this is a sign that the public lacks confidence in the security of the whole ecosystem.
People trust that banks are reasonably secure, since they are protected by FDIC insurance and all kinds of regulatory and consumer organizations. Eventually, BitCoin must adopt some kind of regulation or standard for its exchanges, rather than rely on consumers themselves doing a lot of research to learn about the security of their different choices. The currency’s PR aspect, learning curve, and ease of use are important, in addition to whether or not the technology exists to provide secure transactions.
I think there are two issuses - storage and exchange. Storage amazingly simple to understand. If you have a flash drive, you can store btc. Easy enough. The worst part about storage is it’s so simple people tend to lose their btc wallet. Multiple backups are recommended.
Mt. Gox wasn’t a bank though, it was an exchange. People still need to be able to exchange their btc into USD or Yen or whatever. I don’t think the btc community will readily adopt any form of regulation, not yet anyway. This is very similar to what’s going on in the deep web right now. The Silk Road was a well run illegal site. I say well run because it offered a marketplace where sellers got rated by buyers and so there was a certain degree of trust. Of course, the Dread Pirate Roberts took his cut and there are taxation and money laundering issues to consider, but all and all it was a well run business. Once the feds shut it down a new one popped right up. Went about its business for a few months then took everyone’s btc and left. There are already replacement services around but it’s understandably hard to gain trust. It’ll be the same for the other btc exchanges. Such is the way of a truly free market.
What’s the difference between bitcoins and credit cards? Both are virtual money. For example, I get paid for my work directly to my bank account and then go out and spend using only credit cards. I never see a bill or a coin, just keep some for groceries or some.
The advantage of having bitcoins is to transfer money really cheap compared to bank transfers? Who transfer money far far away btw? I don’t.
Perhaps the 1% of world population would appreciate that… instead of paying up to US$ 75 for a bank transfer from to Hawaii to Arabia, they pay just 0.2 dollar using bitcoins.
I do know is good having such benefits, but bitcoin seems unstable for me.
What is the quantity of bitcoin in the market right now? Is today total quantity the same since the first issuance? Who can issue new bitcoins? When and under what assumptions a new bitcoin would be created / issued? Can bitcoins create short-term inflation in Siberia?
My understanding is there is a finite amount of Bitcoin but it is not all in circulation currently. It must be ‘mined’ by some process that requires servers, power, and computing power. So it actually does a pretty good job of hitting all the requirements of sound money.
Sound money would cut a LOT of what ailes the world.
Correct, there is a limit to BTC creation and once they are all mined the system is supposed to then run based on processing using transaction fees (which there already are, but it would be assumed the fees would go up slightly once the mining rewards are hit) the mining rewards get halved at certain points as well so the rewards decrease over time. Its an incredibly interesting technology, there are certainly some issues with it but I have been following it for a few years and the community is pretty active in discussions relating to how to handle things like micro transactions, notations on how to “split the currency”, fees, tons of other tech stuff I am not privy to.
is there a record of all transactions? are bitcoin accounts linked to your personal bank accounts in some way?
all i can see is the tax authorities are eventually going to come down hard on those who’ve made big gains on bitcoin. i doubt many have been reporting their bitcoin currency gains on their taxes. it will be a penalty and interest bonanza in what is basically a black market right now.
its gotten more official over time. There is a general ledger of recorded transactions. It would be difficult but not impossible to connect transactions to your personal accounts. If you bought the coins long ago you could do it pretty anonymously, especially as a lot of the companies involved have gone bust. Now I am sure there are some ways but they do face pretty strict anti money laundering rules and your name/Id is needed to open an account with most places.
I know that many people who made a ton in bitcoin are planning to pay their taxes on it, as whats the point in making a massive amount of money if you are in prison because you didnt pay your taxes. You might get away with it, you might not. If you had a ton of bitcoin in offline storage, and you slowly sold it and moved it to your accounts you could probably get away with it. Who knows though tbh, not sure if its worth the risk.