[Chugalug] Bitcoin ... algorithms, and scams

Mike Robinson miker at sundialservices.com
Thu Sep 5 01:27:54 UTC 2013


> Much more intelligent people than I have taken apart the Bitcoin algorithms
> (after all, it's all open-source), and to my knowledge, these are the only
> significant vulnerabilities of Bitcoin that have not already been addressed
> in software updates.  The first is being watched closely (for example,
> https://blockchain.info/pools).  I'm not sure what consequences the second
> would have, but the SHA-256 / SHA-2 algorithm has been around for a long
> time without showing signs of cracking.

All right, ladies and gentlemen, at this point I believe that it is appropriate for me to be "a great deal more specific than I have been up to now."

"Currency," first of all, in any and every form, is a purely =human= enterprise.  It could be a gold coin; it could be a gold nugget; it could be a seashell; it could be a massive stone disk; it could even be a piece of paper.  It doesn't really matter, as long as it is (simultaneously ...):  

- accepted
- hard to pick-up on the roadside
- (yet) widely accepted, and 
- relatively common, such that it can be produced in (!) NECESSARY (!) QUANTITY.

"The perfect currency unit" today is probably "the ACH wire-transfer data packet."  On the appropriate, presumed-to-be-secure data network, such a packet is, upon receipt, sufficient to cause the "wire transfer of" an arbitrary "(amount)" of "(currency_units)" from one international bank-account to another.  Billions of (currency_units) change hands every single day, based upon nothing more than this ... including every check that we write, which these days is optically-scanned "even by the ATM machine at Wal-Mart."

But ... "bitcoin is not based on this dynamic."  No, not at all.

Bitcoin is based on a =purely= =psychological= alter-dynamic:  the notion of standing in some mountain-stream somewhere, with a metal pan in your hand, and reaching down into that pan and OMG .. A .. HUGE .. GOLD .. NUGGET!! .. I'M .. RICH! .. "and up from the ground came a'bubblin' crude .. OIL, that is .. BLACK GOLD .. TEXAS TEA .."

The "bitcoin con," first and foremost, is based on the dynamic that "VALUE = SCARCITY."  There are only so-many fish in the sea, and there will never be more.  (Thus saith an "assumed to be trustworthy real-person" who, so far as anyone can actually determine, might not even exist.)  The only way to "have one" is .. to "get one" .. which means that you must (pay $5,000 USD to ... heh ...) "dig one up."  According to whom?  Why, according to this maybe-non-existent unnamed person, of course!!

Fast-forward to "tomorrow, 7-AM at Chattz."  Oops... you can't buy a cup of coffee, because you have not yet been lucky-enough (sorry, it is the luck of the digital draw...) to dig-up another digital gold-nugget.  (And, until you do, you can't eat anything for lunch, or fill-up your car, or buy anything at Hamilton Place.)  Yessir, both you and your employer and your shopkeeper and the guy who takes away your garbage CAN RUN OUT OF ... "Money(!), itself."  Indeed, to extricate yourself from this conundrum, someone's got to (a) discover a nugget .. (b) trade it two-or-three times so that it .. (c) somehow winds up in YOUR hands so that you C-A-N .. (d) BUY - YOUR - DAMN(!) - COFFEE!!

... which, to make things very short, "does not sound like such a practical Currency System."

Nope... "the hallmark of a truly successful HUMAN currency system" ... is not SCARCITY at all.  But ... liquidity.


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