Didn't it happen when the stock market crashed with USD? It just can't though right? Anyway, what I said was very vague. The actual client hasn't ever been hacked, but one of the biggest exchange websites (mt gox) that trades their own btc for your cash was. The hackers made btc only cost 0.01 cent through mt gox, and before mt gox could shut it down many people traded at this price lowering the value of BTC. The "crash" was nothing more than the result of the price getting ****ed up and was later reset to fix what happened. It's a security risk on behalf of the exchanges, not btc itself. It would be like a major bank robbery that was thwarted and all the money was given back. And for everyone that keeps mentioning trust, and how important it is: Their power is limited in the sense that they CAN change the protocol, but if it isn't accepted by the community as a whole then this change would not affect anything. Your thinking about this too much like normal fiat currency, the way that the protocol is designed excludes the need for a central agency to monitor it. The quote does actually answer your question. As I also said above, the developers now have very limited control over the protocol. The only thing in control of it is the people who use it, but any proposed changes must be accepted by all or it won't change. The example of increasing the number of btc is weak because it uses a Controlled Currency Supply so the amount of btc will eventually come to an end (similar to how there's only so much gold in the world). No one will accept increasing the limit (and if they do, the will be cast out as they can't trade with the majority of users using the original protocol) As I stated in another post, it's not trying to be a alternative to paper money, but rather another currency to live along it. Obviously there are many types of currencies in the world. I think I shouldn't have named this "future currency" because it's implying that it is designed to replace normal currency. Your security concerns should be against banks and exchanges, not btc itself. Firstly, not everything on the internet is taxed when using USD. Only some states have enacted taxation of digital goods. Bitcoins are not taxed, but it's unfair to say it was made to facilitate tax evasion. You can read the creator's proposal paper describing the project before he even made the software here. Here's the abstract for an general idea: Now on the subject of tax evasion, I think this pretty much sums it up:
...Yes the stock market crashed in 1929 and started the Great Depression. Kind of a big deal. I don't think you're quite getting what the system being hacked and the money devalued means for a viable system to replace money. The exchanges are how people interact with bitcoins. If they are messed with people will lose faith in the system because unlike your bank metaphor, people can choose to take their money from the bank. They can't choose to take their money back from the exchange if something goes wrong. Again its taken as assumed that such a large system would repair itself. For it to be a global currency those kind of problems can't happen or else the system isn't ready therefore not worth the effort. None of that answered any of what I was saying. I'm thinking about this as any logical person would, "is my money safe". The second part you said is just plain moronic. The internet doesn't monitor itself nor do any other protocol that uses a network. There is always a central agency in charge of things like updates, fixes, improvements, problems etc. That very statement tells me you don't' actually know all that much about if if you think no one monitors the protocol. "They can change the protocol, but if it isn't accepted by the community as a whole this change would not affect anything"....what? Do you know how the internet works? A protocol is code that governs how a network system functions. People can't just choose not to follow it because they feel like it. I can't just send an html file from my computer to a unix machine over the internet. I would need an ftp server using an ftp transfer protocol. The way you're describing how this system is governed it sounds like from the moment of its creation it was perfect and never needing of change nor does it support real change. Because if it did then every single person "the community" would have to be ok with the change, thus nothing happens. Remember I'm discussing this in a hypothetical viewpoint of if this currency system become the global currency. In that perspective it needs to be held to a much much higher standard than individual countries' paper currency. And again, this statement makes no sense. "The protocol" isn't some vague understanding of how the system should work. Its the literal code that governs how bitcoins are sent across a network, how much bitcoins exist, their value, etc. There's only so much gold in the world because there is only so much mineral in the Earth to mine. That restriction does not apply for digital money so my example was very apt. Its a "controlled currency supply" only because the community wants it to be. If the community one day decided, "lets make some more" then nothing stops that. Get what I'm saying? If your response to that is simply, "they won't" then either you have the authority to speak for many thousands of people all of a sudden, or you're speaking from your ass. But hey maybe the protocol wouldn't allow for more money to enter the system...if only there was an agency of people to make sure that stays the case. I do have security concerns with banks and exchanges, can I not have the same ones with a proposed system of money? There is no such thing as "alternative money". I can't just claim monopoly dollars as a viable form of currency that other people take for goods and services. Do know how that messes up an economic system? If such a case happens there needs to be an exchange rate. Even if you didn't mean for this discussion to be about bitcoins replacing world money, the creators of it did. All I'm doing is pointing out flaws. If this discussion was about US dollars then I'd be pointing out the flaws with that system, but its not. You're thinking too single-mindedly on sales tax. Sales taxes are up to the individual states. How would federal taxes work through bitcoins? How about retirement plans? How about assets, liabilities, and equity. How would those three be handled through bitcoin? As a system for a small community it seems just fine but certainly not viable as a respectable global currency Here's something interesting I found regarding someone who had a question about bitcoin's security. http://stackoverflow.com/questions/5605571/is-bitcoin-protocol-future-proof The answer to his question gave a good summary of how a change would happen and why the system is deeply flawed. So to get a change through the final step is to "convince the vast majority of bitcoin users" or else different people end up with different versions. If people end up with different standards that creates so many more problems. Do you know how many issues there was before there were html standards? Every browser had their own rendering specifications and no one rendered pages the same way. It didn't matter if there was a better specification no one was required to adapt to it so they didn't. When html standards were finalized it reduced the clutter and people could have faith that when they loaded a webpage they were seeing it the same way as everyone else.
BTC was only devalued at that moment. The 'system' is also completely independent of the BTC network in itself. And unlike the government which can only insure $100,000 in your bank, Mt Gox was able to completely roll back all transactions. It's almost exactly what happened on Wall Street when it experienced a "flash crash" which you probably have never heard of because it really isn't as important to the over-all market as you'd think. Again, you keep mentioning replacing fiat-currency, which isn't the goal. Wallets are how people interact with bitcoins, not exchanges, which are merely websites that are set up to trade between currencies for a commission. And very, very similar to the bank metaphor, you CAN take your money out of an exchange (in fact your money is never in an exchange because, you know, it was exchanged). Your USD is in your bank and your BTC is in your wallet. Some exchanges have virtual wallets on their site (like mt gox) but there's no fear in losing this money because (like what happened) it can be rolled back. Banks can only insure $100,000, while exchanges can insure everything as it is all tracked on the BTC network. And because the wallet client is the way people interact with bitcoins, exchanges are not even needed. You can completely trade independent of them. They just happen to be groups of people investing in BTC for profit through trade commission. Oh man... The fact you keep arguing this point tells me you don't actually know much about protocols and the internet in general, lol! This system is not the ipv4 or tcp/ip, and it's not your average controlled protocol. A protocol just means something with a set of rules and standards. Yes it can be updated and fixed by the bitcoin devs, but if nothing is wrong with it then it doesn't have to be maintained as it is self sufficient. Go find anything that states that all protocols have to be actively managed by some agency. The IETF and W3C don't even manage communication protocols like you think they do, they simply provide outlines of recommended standards that are either based on law (de jure) or best practices (de facto). Lemme try to put it in terms even you could understand: If bungie made halo 1 (a technological system that has standards and rules) and everyone played it then that's cool. Then they decide to make halo 2 with new features or whatever, and everyone moves to that. Now they make halo 3, but introduce a really OP weapon that makes it easier for certain people to win. They can keep updating halo 3 all they want, but if a majority of players preferred halo 2, then those players will continue to play halo 2 without interference of the halo 3 players. The halo 3 updates wont effect the halo 2 players, so they continue to be happy with the system that is no longer updated. Maybe bungie decides to make a small update to halo 2, then that's cool too, but if people refuse to download the update, they can continue to play the same 'ol halo 2. This is very oversimplified, but it illustrates how you can design protocols to be stand-alone and how community consensus dictates what protocol is used (halo 2). Your money is safe in your wallet because of the cryptographic nature of the program, not because it's maintained by some authority. This is how the system was designed, to eliminate the need of this trust in an authority. And further more the cryptography it uses (such as SHA-1 (hashes) and ECDSA) is based on proven cryptographic standards that are managed by standard organizations in the way I said above (recommendations for best use). A failure to see why you do not need an central agency in this protocol's case, is a failure to understand how this system's technology works. Do you know how the internet works? IPv4 is the dominant internet protocol out there, but IPv6 exists and is also used. There's no need to switch to IPv6, you can continue to use IPv4 as much as you want. Obviously ipv6 has more benefits and is designed to communicate cross-protocols, but you can choose not to use it if you don't feel like it. You can send files through the internet without using a file transfer protocol transfer protocol (lol). TCP/IP, ethernet, IPv4/6, HTTP/S, POP, ICMP, IMAP or whatever. That's besides the point though. It doesn't need 'every single person' to be ok with the change, only a majority (>50%). Most of BTC users are very well versed in technology, and know what changes are acceptable. See? It was designed to work through community consensus. It's an experiment that's never been done before, and your trying to apply tired concepts to this new innovation. Why are you discussing it in this way? It's not out there to replace anything as I've said many times. It's a protocol designed to solve the trust based issues with commerce on the internet. And? How does this not make any sense? The current protocol (and the 2 versions before) is designed not to accept transactions from any other protocol version. If the literal code that governs how bitcoins are sent across a network is changed by the devs, and the users don't adopt it then the new literal code that governs how bitcoins are sent across a network cannot interact with old literal code that governs how bitcoins are sent across a network. It's not that the users have power to not accept new versions, it's that they have the power to refuse to use the new versions and continue to use the version that they want. Whatever version the majority of people accept will be the accepted standard protocol. The source code is freely available, you can go make your own BTC network if you want but it won't do you any good if no one uses it. Yes they could decided to increase the limit, then nothing would stop that. But they won't because (did you even click the link?) the limit is arbitrary. The cap really doesn't matter as it's so far off. There's no such thing as alternative money? LOL. USD, Euros, Pounds, Gold, Franks, Rupees, yup no such thing as alternative money to whatever you consider your main money. You can't use monopoly dollars because they hold no value to other people, if they did you would absolutely be able to trade in that. Where have you seen anywhere that the creator's of BTC were trying to replace the world's currencies? As I said above, replacing currency was not their intent, but rather to propose a way of trading through the internet without the need of trust. Your 'flaws' are either misunderstandings of the technology or some weird ideology that BTC's intent is to take over the world's markets. Again, this is based on your idea of replacing the USD. Federal taxes won't effect BTC because they will still be done through USD. All the other things will also be done through USD. Also: I agree, it is a great system for small communities (actually the entire BTC network consists of about 60K users with 8457600BTC[~$42,288,000] circulating in existence right now) but I don't agree that it cannot be viable as a global currency. Obviously it cannot replace government's fiat currencies, but it definitely has the ability to live amongst them (as it's currently doing). Did you download it from http://bitcoin.org/? If you didn't then that's your fault, delete it and do it the right way. If you did it get it from there was probably saying that it's requesting network access. However, before starting you should look over the wiki and how it works. Here is a pretty interesting article for anyone reading along with the debate: Air Guitars and Bitcoin Regulation
If we'd only listened to Fbu, and picked up a few hundred of these pieces of "Future Money" for $5.00 a piece. I sincerely hope he took his own advice.