[Chugalug] Bitcoin ... algorithms, and scams

Keith uspatentpending at gmail.com
Thu Sep 5 03:22:22 UTC 2013

Hi Mike,

I'm no bitcoin expert but I do have some thoughts on the subject of

First of all, all currency, including physical currency, like gold and
silver is a fabrication. It only has value because we assign it value.

Also you are overlooking the fact that bitcoins will eventually be
completely mined. There are a finite number of them. So, what you are
seeing now is like a gold rush, but with a definite and predictable total
supply of gold.

After the supply available for mining ends, BTC will be the same as any
other currency from a value standpoint, with one exception. All currencies
are valued based on public perception of that currency's value. Most
currencies are valued in part by the faith people have in the nation/body
that issues the currency and can be directly influenced by the policies of
that body.

Bitcoin is the same in that it's valued by people's perception of its
value, and different in that the value is not based at all on the faith in
or policies of the nation/body that issued it, since there is none.

I see only three watch points in bitcoin. One is that it seems like a
currency with no political base could be far more volatile, with traders
having a much larger impact on the value of the currency than the people
using it for purchasing.

The second is whether it will truly become widely adopted as an acceptable
form of credit. Only time will tell.

The third watch point for me is the fact that the number of bitcoins is
static. Whether it's good to have a money supply that can never grow is
something that has been debated for years. To me, it seems bad to be
inflexible this way, but I'm no economist and I could do to read more on
this subject.

All that being said, I think an argument that this is somehow a ponzi
scheme or a scam is probably not a good one. How the currency works is
fairly well documented and it has been working this way for a while.

Mining the currency while it can be mined is something that people are
going to make money on, both in supplying the equipment for mining and
mining itself. When all the coins are mined, that profit is over for both
parties. Until then, the question of whether it will be profitable to mine
is just a cost/benefit analysis based on facts that are openly available.
There is probably not much use telling people that are making money mining
that they are idiots for doing it. As long as they are immediately trading
the bitcoins they mine for USD, I see no value in your arguments against

On Sep 4, 2013 9:28 PM, "Mike Robinson" <miker at sundialservices.com> wrote:

> > 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 (!)
> "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)
> ... 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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