The Bubbly Bitcoin Thread -- Merged Threads

[miggy]

Bad news for Bitcoiners. It seems that a technical vulnerability has been found.

How real the threat is, is a moot point, but Bitcoin is no longer technically unassailable. That must erode faith in Bitcoin, and lead people to suspect there may be other vulnerabilities.

As usual with most reporting around Bitcoin, no.

These researchers have acted very badly, or it may have more been the institution than they themselves. The core idea was discussed 3 years ago although the details may differ slightly. It may not work at all. If it did work some have calculated it wouldn't be profitable. If it did work and is profitable it would lose money at first then need to avoid being spotted for long enough to actually make money, which is unlikely. Once spotted the system can easily be protected. And it's really more of a mining issue and far from urgent or a significant flaw even if they are 100% correct.

Importantly, these researchers did not submit the exploit to the bitcoin security list and did not submit it for academic approval. They did this for the press, no more and no less. This has been very badly handled even if it is a minor thing to examine in the future. It wreaks of self-promotion basically, regardless of the actual content.

Here you go, for a brief summary from the Bitcoin lead developer. More detailed discussion is available on BitcoinTalk and the bitcoin dev/sec mail lists (I presume- haven't checked in the last few days).

http://www.forbes.com/sites/kashmirh...is-not-broken/

We've had 5 years of the very best people trying to pull holes in the system. It doesn't mean there won't be more found but it's very unlikely there will be anything major in the algorithms at this point. Even if this paper were entirely correct, it's not urgent and not major.

Leading with the headline "Bitcoin is Broken" is absolute nonsense. "Bitcoin miners susceptible to 25% attack" would be more accurate but that wouldn't get international press, it would barely get any outside of Bitcoin. And if they just engaged with the developers as everyone else does, they would have had even less press, if any at all. Additionally, they suggested an 'easy fix', then it was immediately pointed out that such a fix could actual add problems. That's why you don't shoot your mouth off before peer review. If you think you have found a major hole in a critical system, you also don't shoot your mouth off in public before informing the developers and giving them a chance to deal with it, as any white hat knows.

Software is a different story. There will be plenty more issues in Bitcoin wallets and implementations.

Edited November 6, 2013 by miggy

[MrPin]

Bitcoins remind me of tulips, somehow?

[@contradevian]

Bitcoins remind me of tulips, somehow?

I was looking at the Bitcoin entry on Wikipedia. A very negative and biased piece I think. Repeatedly refers to Silk Road (which was nothing to do with Bitcoin really) and using to Bitcoin to buy illegal stuff, but I'm sure more drugs etc have been bought with pound notes.

[evetsm]

I was looking at the Bitcoin entry on Wikipedia. A very negative and biased piece I think. Repeatedly refers to Silk Road (which was nothing to do with Bitcoin really) and using to Bitcoin to buy illegal stuff, but I'm sure more drugs etc have been bought with pound notes.

Silk Road back up and running. It's like trying to swat gophers, they just keep popping up , no matter what.

http://www.bbc.co.uk/news/technology-24842410

[markyh]

Price is still going up!

Excellent. My 3 BTC mined since April is now worth way more than the minimg costs and My BFL USPS tracking tells me today my 3 BFL 5GH jaleneno ASIC miners are currently clearing UK customs. May even have them delivered and mining by the weekend! Will need to pay ££100 odd for the import duty though I guess unless i'm really lucky!

M

[markyh]

However, the bigger the network grows, the bigger the cost involved becomes. When I have read about previous tactics to take over the block chain, it has always sounded more economically beneficial to leave it in tact.

Yep the Bitcoin network is growing exponetinally as is the difficultly to mine (run) it. The price is just catching up it seems. I took a screenshot of Bitcoinwatch on 22/4/13 when I ordered my 15GH of USB ASICS.

Difficulty level then was 9 million, I factored in a six month wait and a 10 fold increase of difficulty with no price movement from $100 a BTC by then time I received them. Boy was I wrong!

Today the difficulty level is just over 1/2 a billion!!!, 510,000,000!!. But I guess the price has risen to $250 a BTC too, so not as bad. Still means in real terms difficulty vs $/BTC the difficulty level has risen to the equivilent of 200 million, twice my estimate.

M

[@contradevian]

Yep the Bitcoin network is growing exponetinally as is the difficultly to mine (run) it. The price is just catching up it seems. I took a screenshot of Bitcoinwatch on 22/4/13 when I ordered my 15GH of USB ASICS.

Difficulty level then was 9 million, I factored in a six month wait and a 10 fold increase of difficulty with no price movement from $100 a BTC by then time I received them. Boy was I wrong!

Today the difficulty level is just over 1/2 a billion!!!, 510,000,000!!. But I guess the price has risen to $250 a BTC too, so not as bad. Still means in real terms difficulty vs $/BTC the difficulty level has risen to the equivilent of 200 million, twice my estimate.

M

Was looking at some of the alternatives to Bitcoin (on Altcoins) and one rival felt that because Bitcoin now needed specialist mining equipment it was putting it beyond the reach of the community. One way of looking at it.

[Traktion]

Was looking at some of the alternatives to Bitcoin (on Altcoins) and one rival felt that because Bitcoin now needed specialist mining equipment it was putting it beyond the reach of the community. One way of looking at it.

The great thing is, the best solution should win out in the long run.

Bitcoin has become less distributed with each step away from CPU mining, but rent-a-hash pools are one potential solution. You essentially own a small share in some monster mining rig, instead of the full share of a tiny mining rig.

[LetsGetReadyToTumble]

What's the final value going to be? They seem to be ramping up quite nicely at the moment, and have reached a new all time high, beyond that spike a few months ago.

[LetsGetReadyToTumble]

And this is why we need trustworthy, affordable bitcoin banks.

Short answer: yes you're fine but you must frequently backup your wallet and keep it offsite. I don't recommend bitcoinqt to anyone ever. It's a reference client and complicated. It also requires the blockchain. Electrum doesn't, not sure about multibit. I must admit I use blockchain.info a lot with two passwords (second one is never typed in, click on an in screen pad), 2 factor, and the web plugin. I trade too often to use long term storage.

Long answer: bitcoins are not stored in your wallet at all. Think of your wallet contents as the keys to a safe containing gold; think of your password as the combination lock to another safe, your wallet, containing the keys.

The safe containing the gold is in Fort Knox but fortunately you can teleport there any time you like and you can move any amount of that gold into any other safe in Fort Knox super fast - it only takes half an hour to move it to any other safe, however much you want to move. All you need in order to do this is your keys.

Oddly Fort Knox is made of unbreakable glass, so anyone can look into your safe at any time and see how much gold you have. All they need to know is the address of your safe within Fort Knox. The safe also contains a visible piece of paper saying which other safes that gold came from.

Miners move and protect the gold and the safes for you so you don't strain yourself and can't have any nicked. You normally tip them for this service. Don't tip and your gold move could even take a few days.

Fort Knox also has all the raw gold left in the world, so they pay this to the miners for doing this service. When the raw gold runs out, miners will earn entirely from tips. There is less and less raw gold remaining so every few years miners are paid half of what they were. Deflation is a bitch! But that gold gets more and more valuable to the rest of the world so it all works out really. In 7 years there won't be much more raw gold left (10-12% iirc) altho it will last another 120 years paid in increasingly small amounts.

I just made this up but it sounds about right!

The reason you need to backup your wallet frequently is that, unbeknown to you, after you have moved the gold a few times you are allocated a new set of keys. (It's a bit more complicated than that. Also, in qt you need to backup every 100 transactions at absolute worst but I suggest you do it frequently. Deterministic wallets such as electrum only need to be backed up once as long as they are set to deterministic when you create the wallet.)

You said, "backup your wallet and keep it offsite". Is my 'wallet' the wallet.dat file? Is 'offsite' meaning remove from hard drives and save to USB memory sticks, etc?

I read a lot on forums about 'cold storage'. Can you tell me what that means?

Many thanks again for your help.

Be nice if there was a web site somewhere explaining all this in simple language. I still haven't figured out a paper wallet yet.

[@contradevian]

You said, "backup your wallet and keep it offsite". Is my 'wallet' the wallet.dat file? Is 'offsite' meaning remove from hard drives and save to USB memory sticks, etc?

I read a lot on forums about 'cold storage'. Can you tell me what that means?

Many thanks again for your help.

Be nice if there was a web site somewhere explaining all this in simple language. I still haven't figured out a paper wallet yet.

Is this device of any use?

http://www.bitcointrezor.com/news/celebrate-day-of-bitcoin-trezor?

[giesahoose]

Bitcoins remind me of tulips, somehow?

Nah tulips are pretty

People are just mining and hoarding them and congratulating each other on how much they are worth. I doubt this is the first fool proof unbreakable technology breakthrough that has ever been invented and when it is cracked the value is 0

[giesahoose]

Some people think that Jed McCaleb is "Satoshi Nakamoto" the mysterious creator of Bitcoin, he set up Mt. Gox and then left it to work on other things. He is involved with Ripple and there are a group of them who are trying to get Ripple set up as a better alternative to bitcoin (a sort of updated bitcoin). It doesn't come with out it's criticisms though, see here;

http://www.wired.com/wiredenterprise/2013/09/jed_mccaleb/

quick sell your bit coins and buy XRPs

[NatterJackToad]

It's on steroids right now

[miggy]

Yeah now we're in bubble territory. The manipulation yesterday was incredible. Someone with millions was moving the price around between gox and stamp, then pulled the dam overnight. China buys look a lot slimmer today. Who knows... I'm not playing this game!

[GeordieAndy]

Yeah now we're in bubble territory. The manipulation yesterday was incredible. Someone with millions was moving the price around between gox and stamp, then pulled the dam overnight. China buys look a lot slimmer today. Who knows... I'm not playing this game!

I might buy a few speculative coins when there is a decent pullback but would like to get them for under $100 - possible?

[NatterJackToad]

I might buy a few speculative coins when there is a decent pullback but would like to get them for under $100 - possible?

the media buzz going over $300 will cause could result in it actually increasing again shortly

the infrastructure is much better as well compared to 6 months ago when MtGox was pretty much the only exchange

a big fall could happen, but doubtful.

If I was you, I’d get in now with a small investment (you’re willing to lose!). I’ve done that for the last 12 months, and I’m up and have quite a nice pot when I pull out eventually (no plans to do that in the next decade or so).

EDIT - i'll not be cashing out into fiat, rather just spending my BTC within the BTC economy, which should, be then, be all encompassing.

Edited November 7, 2013 by NatterJackToad

[miggy]

I might buy a few speculative coins when there is a decent pullback but would like to get them for under $100 - possible?

Anything is possible, but holding out for that hope is rather iffy. It's barely been below that other than in the immediate aftermath of the crash. Although this may also prove to be a bubble, the underlying trend is up. We've had a huge new input and the (commodity) side of things is much more secure than before.

Saying that, we're near the point where I can nicely cash out my original investment and then let the rest ride for years.

[Traktion]

the media buzz going over $300 will cause could result in it actually increasing again shortly

the infrastructure is much better as well compared to 6 months ago when MtGox was pretty much the only exchange

a big fall could happen, but doubtful.

If I was you, I’d get in now with a small investment (you’re willing to lose!). I’ve done that for the last 12 months, and I’m up and have quite a nice pot when I pull out eventually (no plans to do that in the next decade or so).

EDIT - i'll not be cashing out into fiat, rather just spending my BTC within the BTC economy, which should, be then, be all encompassing.

That last part is key. If Bitcoin continues to grow in value, 'cashing out' won't even be a consideration. People will just spend them directly.

Re pull backs/crashes - there is bound to be one sooner or later, but from how much and to how low... you need a crystal ball for that one!

[Traktion]

Anything is possible, but holding out for that hope is rather iffy. It's barely been below that other than in the immediate aftermath of the crash. Although this may also prove to be a bubble, the underlying trend is up. We've had a huge new input and the (commodity) side of things is much more secure than before.

Saying that, we're near the point where I can nicely cash out my original investment and then let the rest ride for years.

Yeah, the low was about $50-60, after the $260 peak in the last cycle.

We're already around $300, so a similar retrace - if it crashed today - would leave us in the $60-70 territory. Timing would be critical to get those prices though.

However, I suspect this bubble has further to run up; it's starting from a higher base, with a better ecosystem. It's all guesswork, but I wouldn't be hugely surprised if we went over $1,000 before any crash... the retrace would likely to be proportionate too.

Edited November 7, 2013 by Traktion

[Eddie_George]

Yeah now we're in bubble territory. The manipulation yesterday was incredible. Someone with millions was moving the price around between gox and stamp, then pulled the dam overnight. China buys look a lot slimmer today. Who knows... I'm not playing this game!

If Bitcoin becomes a competitor to gold as some suggest, then it has to get to $100,000+ somehow - and in a reasonable time-frame -that's a fast growth rate. I think it is a better storage of wealth in the internet age. Gold is fairly illiquid in comparison.

[skrillex]

You said, "backup your wallet and keep it offsite". Is my 'wallet' the wallet.dat file? Is 'offsite' meaning remove from hard drives and save to USB memory sticks, etc?

I read a lot on forums about 'cold storage'. Can you tell me what that means?

Many thanks again for your help.

Be nice if there was a web site somewhere explaining all this in simple language. I still haven't figured out a paper wallet yet.

Yes, shut down the Bitcoin client and then wait a few minutes to make sure all the files are properly closed. Then move the wallet.dat file from the Bitcoin folder/directory to a memory stick and keep the memory stick disconnected from any internet connected computer. Keep the memory stick very very safe. The wallet.dat file is the only way to access your coins. It's wise to make several copies. After moving the original wallet.dat the next time you start up the client you will have a new wallet with no coins it. Keeping the wallet airgapped from the internet like that is called "cold storage". When you want to spend your coins just swap back the original wallet.dat file.

It's a bit of pain swapping the files but it's worth it for peace of mind.

[evetsm]

Yes, shut down the Bitcoin client and then wait a few minutes to make sure all the files are properly closed. Then move the wallet.dat file from the Bitcoin folder/directory to a memory stick and keep the memory stick disconnected from any internet connected computer. Keep the memory stick very very safe. The wallet.dat file is the only way to access your coins. It's wise to make several copies. After moving the original wallet.dat the next time you start up the client you will have a new wallet with no coins it. Keeping the wallet airgapped from the internet like that is called "cold storage". When you want to spend your coins just swap back the original wallet.dat file.

It's a bit of pain swapping the files but it's worth it for peace of mind.

and also encrypt the wallet.dat file

[happy_renting]

OK I am going to take the plunge for a few BC... probably too late, but I'll take a punt.

There is a lot about the buy/sell process that I don't understand. I hand over real money to someone anonymous, and *hope* they will send bitcoins in return? That *hopefully* will arrive after a few minutes, or an hour? What protection do I have from them doing a runner?

If I meet them face to face, presumably i will need a device (laptop, smartphone) with me to effect and confirm the transfer?

For someone to send me bitcoins, what do I give them? The long address generated by my wallet?(e.g.1CVAHZDdhuuDf63n8Ev1hmJFFa1Qtegu7UA (thats a fictitious one BTW))

Presumably when they send it, it is added to the blockchain, and my wallet eventually verifies it has been added.

Edited November 7, 2013 by happy_renting

[happy_renting]

Another thing - for someone as daft as me, it is not clear what a lot of these different websites do - some such as Bitstamp can hold bitcoins in association with your account on their system, with the option of transferring to a personal wallet?

What i am anxious about is:

• Sending money off into a void without providing the info needed for the bitcoin to 'arrive' i.e. be added to the blockchain associated with some sort of address that allows it to get to my wallet;
  
• Disclosing some key by mistake (due to my misunderstanding) that will allow anyone to grab the bitcoin.
  
•