[cryptography] Digital cash in the news...

[Ian G]

On 11/06/11 9:01 PM, Eugen Leitl wrote:
> On Sat, Jun 11, 2011 at 03:58:07PM +1200, Peter Gutmann wrote:
>> "John Levine"<johnl at iecc.com>  writes:
>>
>>> I wouldn't call bitcoins digital cash.  They're more like digital tulip bulbs,
>>
>> Finally an analogy I can use to explain bitcoin to the masses (well, assuming
>> they know about the tulip mania).  I've been using Bartercard, which is a good
>> analogy but somewhat limited in international recognition.
>
> Tulips were an investment bubble, not means of payment.

A requirement for a bubble would be a promise of ever-growing value, the  
rest is just the marketing.

> People are so
> quick to trust alternative local currencies and digital currencies
> because the official currencies have issues with being gamed (e.g.
> built-in inflation tax).

Yes, this is what I mean by the obsession against government monies, which 
makes people vulnerable to putting their value into alternate currencies.  
Their desire to thumb their nose against the government outweights their 
desire to manage value wisely.  To the extent that people put their funtime 
income into this, it's the same as movies, gambling, porn.  Fine, but some 
people will inevitably invest their fortunes in it...

What is most extraordinary about the current thing -- and what tends to  
confirm "bubble" to me -- is that the same people who were desperate for  
the privacy promise of blinded bearer coins are projecting their old  
privacy beliefs on the nymous BitCoin:

http://www.pcworld.com/article/230084/us_senators_want_to_shut_down_bitcoins_the_currency_of_internet_drug_trade.html
http://www.reuters.com/article/2011/06/08/us-financial-bitcoins-idUSTRE7573T320110608

<blockquote>
The biggest drive towards the use of Bitcoins on sites like Silk Road is  
that they supposedly cannot be traced [1]. However, a member of the  
Bitcoin core development team told Gawker that "...because all Bitcoin  
transactions are recorded in a public log, though the identities of all  
the parties are anonymous, law enforcement could use sophisticated network 
analysis techniques to parse the transaction flow and track down  
individual Bitcoin users."
</blockquote>

Such a comparison was denied vociferously in bearer days.  Blinded  
transactions were the only way to do it, and the nymous architecture now  
seen in BitCoin was considered evil because the issuer could supposedly  
see "all".

Worse than a private nymous system, this one is public?!  What could be  
easier to datamine than a public database?  Give me a public database and a 
handful of subpoenas, and this thing goes down.



iang



[1] Note confused terms there.  BitCoin can be traced, but the holders  
aren't identified.  This is called "nymous" in the trade.  In contrast,  
bearer coins could not be traced, but typically the holders had identified 
accounts.  "Untraceable."  One system achieves privacy through a perpetual 
public key account mechanism, the other through an untraceable transfer 
between known persons.  You can take these axes and combine them to create 
4 spaces if you desire...

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Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org
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