[cryptography] Digital cash in the news...

Ian G iang at iang.org
Sat Jun 11 10:22:08 EDT 2011

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:


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."

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.


[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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