A Newport man has been searching a landfill site in south Wales hoping to find a computer hard drive he threw away which is now worth over £4m. James Howells’s hard drive contains 7,500 bitcoins – which is a virtual form of currency for use online[From BBC News – James Howells searches for hard drive with £4m-worth of bitcoins stored]
This is just the sort of story you would have seen in the Dutch press four centuries ago. Chap accidentally eats valuable tulip bulb, and such like. James is never going to get his Bitcoins back. How disgusting would it be to dig through that landfill anyway? I suppose you could over teams of prospectors a couple of million quid between them to dig down through the two metres of fetid, decomposing garbage to try and find the compacted remains of the drive, but even then would it be readable? And would he remember the password? Perhaps he took better care of the Post-It with his secret phrase on it. Anyway, with all this talk of Bitcoin wallet loss (and hijacking and theft) going on, it is good to see that there are entrepreneurs looking at the security problem from a practical perspectives.
By printing out your own tamper-resistant bitcoin wallets and generating your own addresses, you can minimize your exposure to hackers as well as untrustworthy people in your home or office.[From Print Tamper Resistant Paper Bitcoin Wallets (BitAddress Generator)]
Unfortunately, I can see at least one tragic vulnerability to this high-security strategy for fending off e-bandits. You create a new wallet and print out the address on a piece of paper instead of storing it on your node in the global bot net. Now, what happens if you lose the piece of paper? Or what happens if, to choose an unlikely contingency, the dog eats it? If the dog eats your cash, there is a ready-made rectal recovery strategy…
Eventually, he drained and rinsed the pieces, using a screen made for sapphire panning. Once the bills were dry, he painstakingly pieced them back together with tape and put each individual bill in a plastic bag.[From U.S. Treasury reimburses Helenan $500 after pet’s snack]
Now, to me, this is yet another reason to never use cash again. If a dog eats my Amex card or I accidentally throw it out with last night’s leftover curry, Amex will send me another one I don’t have to pan through dog shit or rotting food to find the fragments. But other people think differently, and they don’t want the man tracking them. They want to use Bitcoin and they want their hoard to be secure. Hhhmmmm…
Well, this could be good for the cash guys. Much as the European Commission insists on a completely pointless and misleading “merchant indifference test” for electronic payments, I think they should introduce a dog indifference test for new currency. I imagine that plastic banknotes might be made resistant to the digestive enzymes in a dog’s stomach in some way, and this would give the folding stuff another string to its bow. The Bitcoin chaps will have their work cut out trying to replicate that aspect of cash in circulation.
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A problem with your example of the Amex and the dog is that a pub near me hates / Mastercard / Visa / Amex with a passion. He’s prepared to trust people rather than let the middlemen divest him of 3%. So he doesn’t take them. I visited him a few years back and he said don’t worry about it, pay next time. I sent posted a cheque, as it’s 20 miles away. When you are turning over a couple of million GBP, charges are an issue and he camping site next to him and the nearest cash point is er….
Bitcoin is just the disintermediation of the banking and financial industry. And those industries will just adapt.
If you place wholesaling powers directly into the hands of consumers, of course you are going to have problems. However I believe that we will have other providers to provide your security for you in the future, perhaps those businesses formerly called retail banks.
Bitcoin is not suitable for EPOS retail applications, the confirmation times were never designed for it. That’s just a media story – guff. And Apple have been lent on to remove Bitcoin Wallets from iTunes by someone…
When you loose your card or it gets defrauded – your retail just paid for it. It wasn’t freely protected, because I’m pretty sure retailer just add 3% to everything as a cost of business?
Target in the US found that credit card details of their customers were getting sold. If they had used cryptocash, the customer wouldn’t be being defrauded. That’s 40 million customers, and the last time I read, they are not even telling their customers. The banks are going let the customers discover that their cards have been frozen at “gas station” – lovely. And unwinding this mess isn’t free – we the people pay for it. Actually we probably don’t because I bet everybody reading this post clears their card at the end of the month and romps the royalty points. So actually poor pay for it who use their cards as a perpetual overdraft.
But my favourite myth of the moment is that Bitcoin is deflationary!
It doesn’t matter, gold did us absolutely fine until …
Gold as a Store of Value – by Stephen Harmston, World Gold Council
Quoting from Nathan Lewis on Forbes
“It has data from 1596 to 1971 in Britain. These are basically commodity price indexes, because those are the only price series that we have going back to 1596.
What it shows is basically a flat line. From end to end, commodity prices (compared to gold) actually go up a little bit over the time period, denoting an inflationary rather than deflationary long-term trend.
However, the difference is so small that it can be considered statistical noise. In essence, the price data shows that gold is indeed stable in value, as much as anything can be over a four-century period. Sometimes people say that economies have a “deflationary trend” with a gold standard. What they seem to mean by this is that many goods and services become cheaper in price over time.
For example, computers are much cheaper today than they were thirty years ago. This is due to advances in technology and processes, not any sort of monetary distortion. At the same time, other things–notably urban real estate and wages–tend to go up in value over time, reflecting the increasing societal wealth that tends to happen with a gold standard system. Both are natural occurrences when you have a currency that is stable in value.”
I do not believe that either Keynesian economics or Austrian can work with Fiat currencies. We have finite earth resources, energy is hard one with Thorium just around the corner. But an ever expanding money supply seems like a white coat job to me.
The general public, I think it’s better to sell it to them as a digital tally stick, of a fixed quantity of sticks.
As for the media, please tell them the tulip price mania story is passé. He who the price of everything, knows the value of nothing.
Bitcoin’s true value is applications which will sit on top of the blockchain. but this is probably about as easy to explain to the public as quantum entanglement.
Protocols which sit on the top of Bitcoin blockchain could start to destroy the financial establishment, whether they class Bitcoin as a currency or commodity. It doesn’t matter – does it?
My thoughts for the New Year for Digital Money, we must look at the past to see the future – Pounds, shillings and pence?
I recommended this as an interesting read:
Regulating Digital Currencies: Bringing Bitcoin within the Reach of the IMF
“identity is the new money”
Yup – we’ll have to watch how the Dark Wallet progresses, will it provide distributed identity and distributed reputation?