A quick translation of the Baidu Jiasule press release:
"As a cutting-edge IT guy and a professional webmaster, what else can showcase our difference? The answer is that we have Bitcoin!
Bitcoin, as a new electronic and digital currency, is being accepted internationally. It's also used in daily lives. You can use Bitcoin buy a cup of coffee, or easily convert it to cash. But in China, Bitcoin is still a fairly new thing. Today, we have a good news: from today, we are starting to officially accept Bitcoin as a payment method. You can use Bitcoin to buy all Baidu Jiasule services. Baidu Jiasule as an innovator in the Internet industry, is now the first cloud service provider to accept Bitcoin and give everyone a better payment method and experience."
Jiasule is just a little company (service) Baidu acquired August. This decision is probably made by this independent company, not by the main company Baidu. And other services Baidu provide doesn't accept Bitcoin.
I couldn't imagine any big company in China will officially accept Bitcoin in the future at all.
Even large payment companies in China (like Alipay) could do litter about economic innovation, they have to obey the rules set by the government and bank.
Any big company in China could challenge these rules by using a method which independent of any central authority in the future? I don't think so.
While I don't think that large Chinese companies like Baidu will accept bitcoin in the near term, the exchanges in China are actually booming. Chinese traders on the bitcoin forum say that it is quite easy to get state currency on and off the exchanges (much better than the US), and apparently it is competitive enough for several exchanges to be running extended no-trading-fee promotions.
You can see Chinese bitcoin trade volumes at this site: http://btckan.com/price (Google translate, also don't forget the 0-fee promotions). I hear that a one or two of them have shady reputations, but the majority don't. Volume has been increasing, and is rivaling dollar trade volumes. So the government isn't too overbearing in this regard, it seems. The state media also ran a detailed bitcoin TV special several months back.
>This country is tightly controlled by the government.
Strange, I always hear quite the opposite. That everything is simply too big at this point and although there is the appearance of a big controlling force, there really isn't one anymore.
Above-the-counter currency-exchanges are still pretty heavily regulated by the Chinese government. See, the ongoing China scam works like this:
* traditional Chinese culture would have the children care for their parents and grandparents in their old age
* one-child policy means that each child has two parents and four grandparents to care for exclusively, so that's not going to work out so well, therefore:
* everyone saves like crazy
* the state-run banks pay negative real interest rates (less than inflation)
* the state-run banks loan to big state-owned firms at negative real interest rates (and you can do amazing things when paying for capital at negative interest rates)
* the people in charge of the state-owned firms live lavish lifestyles off the profits and provide political support for the regime
* from time to time the government has to work to suppress riots over high food prices and other consequences of inflation
This breaks down if the ordinary people can get hold of a currency that isn't full of inflation. So, capital controls limit how many dollars people can get a hold of.
Of course, Bitcoin in the mix could be interesting. Or rendered illegal. Or both.
Except people in China don't have to save money by putting it into a bank account. They find other ways to invest that beat inflation like people all over the world have to do. And currently in China, that's real estate.
Also, there is no practical limit to how much dollar you can get with yuan, it's called the grey market.
It's pretty astounding to me how Americans can still have such simplistic and misplaced views of how things works in other countries.
Entirely curious: has he posted that he is American before? Where are you getting that from, are are you generalizing about all Americans and not talking about the poster above?
Yes, I'm American. I'm also generalizing and simplifying because an in-depth analysis of the China scam is the proper subject of a Ph.D. thesis and not a HN comment. As lionspaw has noted, there are complicating factors like the property boom (/bubble) and the grey market for inflation-resistant currencies. These hamper the current capital controls but do not render them entirely useless.
> one-child policy means that each child has two parents and four grandparents to care for exclusively, so that's not going to work out so well
Some on-the-ground experience with China would indicate that the one-child policy has basically no effect on the number of children per couple. As would the international fertility stats.
Most recently, I asked a group of chinese software developers about the policy. They went around the table admitting they weren't only children.
My experience is the exact opposite. My wife and her brother are the only set of siblings among their cousins (of which there are money, because their grandparents had a massive quantity of children). The financial repercussions of disobeying the law are fairly severe, so people don't generally bypass it.
I wonder what the explanation could be for our radically different experiences. Mine is all around Beijing, is yours perhaps out somewhere less urbanized?
I wouldn't say that. My experience is all Shanghai.
Potentially it's an SES thing, but note that the fertility statistics show very low fertility for China, so a lot of only children isn't unusual overall. The conclusion that the one-child policy isn't having any effect comes from the fact that Japan and Korea have the same ultra-low fertility rate, but no one-child policy.
Japan and Korea seem like bad comparisons, since they're relatively rich. It's fairly well known (read: I don't feel like looking it up right now) that there's a strong negative correlation between wealth and birth rates. But I don't know what the right comparison would be (China is kind of incomparable) nor what the answer would be.
Perhaps the best comparison would be India, and the disparity in birth rates there is stark, but there are massive other differences as well.
Well, going by the firewall which is constantly updated and maintained, and arresting people for criticizing government officials, I would say the government at the least tries to control the country strictly.
Ever heard of Snowden, Manning, or Assange? (names from the top of my head, but the full list is endless) Besides, if someone (a regular person) were to disappear for being a dissident, you would never find out. And it would fit perfectly the US behaviour in every other matter.
I said "dissidents." All of the above three leaked classified secrets; countries like China will arrest you and subjugate you to inhumane conditions just for criticizing the government, or trying to start political change.
I share that opinion so I'll answer. IMO, China letting control over currency just slip away is as realistic as China letting control over anything slip away. AFAIK it's still an authoritarian state. It could happen (it has a relatively free economy after all) but it's not consistent with China.
> Surely they don't see themselves as an authoritarian control-monger.
Why do you believe this? There's a very long chinese tradition of vesting control in the social hierarchy. "Authoritarian control-monger" may be dirty language in the US, but not everywhere.
Looking at the bitcoin address [1] Baidu posted in the press release, it looks like a whopping 0.00326169 BTC has been deposited into their wallet. I know they just set it up, but I guess I would have expected slightly more activity by now. This makes me wonder if it's more of a PR stunt than anything.
I know that Reddit, after months of enabling Bitcoin as a payment option, still only got 3% of their entire revenue in Bitcoin [2]. I like the concept of bitcoin but as of now, it seems like many of these initiatives are launched by businesses to get "tech people" interested and to make news about their business. That's not a terribly bad thing though for bitcoin because businesses are still adopting it. It just would be nice to see Bitcoin used more than 2.5% of the time.
Reddit getting 3% from Bitcoin actually sounds like quite a bit. I know there's a lot of stories about BTC, but I still think of it as a fairly obscure thing.
"Total Received" is the amount that address has received ever. Even if they transferred the money to other wallets, the "Total Received" amount would not go down.
You're supposed to pay to a bitcoin address included in their press release, and then notify them about this. For a major NASDAQ-listed company, this approach seems startlingly half hearted.
Ridiculous really. You use a new address every time, a single one for a company is not the way you're supposed to do it for many reasons, not the least being that you can't tell who paid for what.
The importance of unique bitcoin payment addresses is overstated. What Baidu is doing is fine, in my opinion, if their transaction volume is low.
I think it is perfectly safe to have a single address and for someone to say "Hey, I just sent 66.32 btc to your payment address."
In the one-in-a-thousand chance that someone else claims to have sent that money as well, you can just ask the sender to sign a message with the source address' private key.
Still, I agree long term you'd save yourself extra work by setting up separate payment addresses.
Is that really the cryptosystem people are using? Generate a new private key for each transaction? Even with as cheap as generating keys has gotten, and as large as the pool of unique bitcoin addresses is, that just doesn't scale. It's a management nightmare. Your system is far saner; Send the payment, send a message tying the address of the payment to the transaction. Only ever requires one key, way less susceptible to weird timing attacks.
Bitcoin has much deeper issues as a cryptosystem than that. There is no actual security definition, just vague concepts about what should not be possible. Even under the vague notion of Bitcoin's security, there is a known, efficient, and technically feasible attack -- at best all anyone can say is that it is an expensive attack, in the low billions of dollars to pull off. Preventing that attack would require half the computing resources in the world to be devoted to Bitcoin at all times.
Yes, just like preventing invasion of your country would require half the military resources in the world to be devoted to your protection at all times.
The difference being that military resources have little use outside of military operations. The resources needed to secure Bitcoin have many uses beyond Bitcoin. All that energy, all the silicon, all the computer time, etc., etc., etc. could be used more productively. You are also forgetting that the invasion of one nation is not equivalent to the invasion of all nations, but that if one attacker controls Bitcoin's block chain, the security of all Bitcoin users is compromised.
Meanwhile, in the world of cryptography research, we have known how to make secure digital cash, with rigorous security definitions, without the need for such vast energy or computing resources, with support for offline transactions, etc., for decades. The only real difference is that academic systems call for an authority or group of authorities that issue the currency, though that is not as bad as it might sound if you consider the problem of actually defining security without such an authority (Bitcoin's solution, as I mentioned, is to simply not bother with such a definition). It is hard to even say that Bitcoin has no central authority at this point; the developers of popular Bitcoin software have tremendous power over Bitcoin (e.g. they can trigger block chain forks).
> The only real difference is that academic systems call for an authority or group of authorities that issue the currency.
That's quite a difference, and one of the main features of Bitcoin. See the message in the genesis block.
> It is hard to even say that Bitcoin has no central authority at this point; the developers of popular Bitcoin software have tremendous power over Bitcoin (e.g. they can trigger block chain forks).
"That's quite a difference, and one of the main features of Bitcoin. See the message in the genesis block."
That is a political statement not a technical statement, and this gets to the heart of the problem with Bitcoin and with its lack of a security definition. Bitcoin is popular, particularly among those who distrust the banking system, because there is no requirement for a central authority; that is certainly true but only in a pedantic sense. Without a security definition it is hard to even talk about what Bitcoin requires.
What we have therefore is a situation where no amount of technical criticism can matter with Bitcoin. Polynomial time attacks are irrelevant, because there is no requirement that Bitcoin resist polynomial time attacks. There is similarly no particular scalability requirement, and so there can be no real criticism of Bitcoin's scalability. "True believers" in Bitcoin can easily shoot down criticism because critics cannot actually point to any requirement that Bitcoin fails to fulfill: there are no clear requirements to point to.
To illustrate this point, consider this statement: There is a polynomial time attack on Bitcoin, and the whitepaper itself describes it. Now, is this a problem? Well, the answer I consistently get from Bitcoin devotees is no, that is not a problem because that is how Bitcoin works. With logic like that, who can argue?
So while you call the lack of an authority a feature, I call it a logical gap until a rigorous security definition is presented. Otherwise you have a solution in search of a problem, coupled with a community of people who all have their own vague notions of what they want Bitcoin to do for them.
> That is a political statement not a technical statement
Just because it doesn't have the particular kind of specification that you are looking for, it doesn't mean that it's not technical. Being distributed is very much a technical feature, no matter how you look at it.
I much rather have a working solution that might or might not be broken in the future (if it was too damn insecure, someone would have broken it already), than be stuck forever with the old banking system just because we don't know how to create the mathematical/cryptological model that you are used to and would grant 100% theoretical security. That would be like not building a website or shutting down a project mid development just because some component is found to be difficult to unit-test.
"I much rather have a working solution that might or might not be broken in the future"
What does it mean for Bitcoin to be "broken?" That is my entire point here: if we do not have a clearly stated definition of what security means, then we cannot even talk about whether or not a system is broken. To put it another way, I would call any cryptosystem that can be attacked in polynomial time "broken," yet in the case of Bitcoin there is the 51% attack which apparently does not bother you -- and like I said, despite the fact that I call it broken, I cannot actually point to anything that would have required Bitcoin to be secure against such an attack.
To put things in scientific terms, we are talking about falsifiable hypotheses. As an example, here is a commonly assumed hypothesis: the block cipher AES is a pseudorandom permutation. This is a claim that could be disproved i.e. we can falsify the claim by presenting an algorithm that efficiently distinguishes AES input/output pairs (with a secret key that the algorithm does not receive as input) from the input/output pairs of a random permutation. Consequently we can speak about the security of AES in a meaningful way, even though have no theoretical proof that it meets its security definition (only heuristic evidence and a lack of known attacks).
My point about Bitcoin is that we do not have such a hypothesis, so we cannot even be sure that we mean the same thing when we say, "Bitcoin is secure" or "Bitcoin is broken." That is the point of having a security definition. Without such definitions, you can always make the claim that Bitcoin is secure, not matter what sort of attacks are carried out, because you can always just say that Bitcoin is not supposed to defend against those attacks.
It's pretty intuitive and I'm sure you know it: People being able to break the rules. Eg: create coins out of nowhere, move coins that weren't theirs, slow down transactions, unstabilize the market, etc.
To say that it's not falsifiable is a bit of a stretch. It is falsifiable, we just don't know how to create the model you are looking for. Maybe it can't be done [with crypto]. Maybe it wasn't a competence of Cryptography to begin with, and we need an entirely new field (I know cryptographers have tried in the past, but to me this seems different). Don't you agree that Bitcoin involves too many disciplines to try to simplify it into a cryptographic formula? Something that breaks Bitcoin could even simply come from Economics, and your crypto model (if you ever find one) would be useless.
Or, there is a cryptographic model, has been proven secure, and we just don't know it because its creator[s] wanted it to stay secret.
Let's try with an analogy (you can attack it or say why it's bad). Your ship is sinking for some reason, there are no emergency boats, but you find out something that might be used to stay afloat. You hesitate, because you don't have physical proof of it like you did with the ship (an expert created the drawings, calculated the forces involved, etc.). But then you see a lot of people using it and it's working fine. The more time it passes, the more certain you are that it works. That's empirical evidence, and it drives a big part of scientific advancements.
So maybe once each field is validated individually as thoroughly as possible (crypto components are being used correctly, the correct distributed computing techniques are used for scaling to the moon, the economic variables are chosen correctly -Satoshi wanted Bitcoin to mimic gold-, the right incentives are given to miners and hindrances to attackers -Game Theory-), only empirical evidence can be used to finish the test.
If by breaking Bitcoin you can silently steal millions and safely cash out (one hell of an incentive in my book), yet no one does it, I say it's secure enough. Not in a cryptographic or <individual traditional field> way, but in a pragmatic way. It just works.
"It's pretty intuitive and I'm sure you know it: People being able to break the rules. Eg: create coins out of nowhere..."
Ah, but therein lies the problem. If there is no authority that issues the money, then any party must be able to create money from nothing (or there would be no money in the system), and must be able to do so efficiently. This is where the first vague notion of security in Bitcoin arises: the idea that you can generate the money efficiently, but not "too efficiently." Unfortunately there is no well-understood security model that allows for efficient-but-not-too-efficient attacks.
"Don't you agree that Bitcoin involves too many disciplines to try to simplify it into a cryptographic formula?"
Two disciplines, as far as I can tell: economics and cryptography. One discipline motivates the other here. Theoretical understandings of money and money creation come from economics; whatever that understanding is, the security definition needs to capture it. The involvement of another discipline does more to motivate the demand for a security definition than to make it irrelevant.
Suppose you could identify or develop an economic theory for money that has no intrinsic value and no central authority. You would still have to have some security definition that captures that theory to make a convincing case (or at least a meaningful statement) that the money in Bitcoin meets the requirements of that theory. If you cannot identify an economic theory that supports a system like Bitcoin, you are no better off than if you cannot state a rigorous security definition.
"Something that breaks Bitcoin could even simply come from Economics, and your crypto model (if you ever find one) would be useless."
Whatever hypothetical security definition you had would not be useless in that case. Rather, it would be that systems that satisfy that definition do not make economic sense, and hence that entire category of systems has no practical use. I would say that in that case, Bitcoin would be solving the wrong problem, rather than that Bitcoin was "broken" (which I take to mean that it does not solve the problem it is supposed to solve).
"Let's try with an analogy (you can attack it or say why it's bad). Your ship is sinking for some reason, there are no emergency boats, but you find out something that might be used to stay afloat."
Are you suggesting that Bitcoin is a system that people desperately cling to when they believe that well-designed systems are failing? I think this might be the wrong analogy, at least if you are trying to defend Bitcoin.
A better analogy might be this: you are standing on a ship. You do not like the captain and his decisions, so you grab some hunks of wood, styrofoam, tires, and a barrel full of fuel oil, lash it together with some rope, and set sail.
Which would you rather be standing on -- a well-engineered ship that might sink if the captain makes bad choices or if the crew fails to maintain it properly, or something that some guy assembled from stuff he found that seemed relevant to ship-building and which seems to float, seems to have no captain to make bad decisions (but might be split in half if the crew cannot agree on a heading), and which has not yet sunk under the weight of its passengers?
"If by breaking Bitcoin you can silently steal millions and safely cash out (one hell of an incentive in my book), yet no one does it, I say it's secure enough. Not in a cryptographic or <individual traditional field> way, but in a pragmatic way. It just works."
What if the attacker does not want to steal money, but just wants to disrupt the system? Imagine a hypothetical "Satoshiland" where Bitcoin is a major economic force; now imagine that another, more powerful country is about to go to war with Satoshiland, and that their goal is to destroy everything. If the invader can block transactions, create transactions then reverse them, and kill the mining bonus, they can cause vast economic harm -- without firing a single gunshot.
Or (slightly) more realistically, what if the US government wanted to block payments to Wikileaks. What if that is worth more than whatever it costs to do so (ie a "51% attack"), and more than whatever hypothetical mining payoff could be had by just devoting the hardware to mining?
I would not assume that the adversary's goal is your personal goal.
LOL, great counter analogy. Well, let's hope you are wrong. Either way, it will be something interesting to watch. If Bitcoin dies overnight, we are going to see a lot of people jumping off the buildings. And if it succeeds, you know, we will become a type I civilization and all that...
> the developers of popular Bitcoin software have tremendous power over Bitcoin (e.g. they can trigger block chain forks).
If Bitcoin developers do something that miners don't like, they lose their base. Developers are as invested as miners are and don't want to risk a drop in the value of their bitcoins.
The balance is that developers are accountable to miners and users, unlike central banks that aren't accountable to us.
"If Bitcoin developers do something that miners don't like, they lose their base"
How is that any different from what happened with Chaum's startup (digicash)? Bad management resulted in a failed business.
"The balance is that developers are accountable to miners and users, unlike central banks that aren't accountable to us."
Central banks are accountable to their customers insofar as the management of a currency is concerned. If a currency is poorly managed, it will fail, which leaves the bank without any authority. Sure, the bankers might remain wealthy if they happened to hold assets other than the currency -- but the same is true of Bitcoin developers, who might simply sell their BTC on some exchange and thus protect themselves from a Bitcoin failure.
Yep, everyone should be using HD Wallets. Not only are they essential for one's own privacy, but they are also good for preserving overall network privacy. Plus, they make accounting easier.
>that it is an expensive attack, in the low billions of dollars to pull off. Preventing that attack would require half the computing resources in the world to be devoted to Bitcoin at all times.
That sounds like a 51% attack, although the 'half of all computing resources' is off the mark. The OP is right here, it is a very feasible attack at the moment, which is why some are concerned that SHA256 is too specializable (ASICs) which means that a dedicated adversary with access to chip manufacturing could print a few wafers and own the network at low cost.
There aren't many attacks on the network that require that kind of computational power. I could see the NSA running a large portion of nodes to de-anonymize users, but beyond that I don't know what else it could be. A double spend attack wouldn't require much effort (right now at least, that will change) [1].
"'half of all computing resources' is off the mark."
I suppose that I could have stated it somewhat better by saying this: half the energy output of the planet needs to be devoted to the most energy-efficient Bitcoin mining hardware possible to guarantee that no attack is occurring, and only if that hardware is being used by honest miners and not an attacker. Of course, in practice no attacker will amass anything close to that (it would leave no power left for anything other than Bitcoin), but in practice the world will never devote anything close to half its energy resources to Bitcoin. Even generous estimates of what the world's energy economy could devote to Bitcoin leave an awful lot of room for an attack, and while the attack might not make economic sense in terms of the market value of Bitcoin or the mining payoff, it might be part of some broader plot (perhaps a war against a country where Bitcoin is popular and widely relied on).
"I could see the NSA running a large portion of nodes to de-anonymize users"
Why would they bother? Bitcoin transactions are broadcast to the entire Bitcoin network anyway. All the NSA would need is a handful of desktops and some auxiliary information about which wallets belong to which users (perhaps gather by watching Bitcoin exchanges). Bitcoin makes no anonymity guarantees at all.
> Even generous estimates of what the world's energy economy could devote to Bitcoin leave an awful lot of room for an attack, and while the attack might not make economic sense in terms of the market value of Bitcoin or the mining payoff, it might be part of some broader plot...
I won't refute this, because you are right. I was just speaking in more manageable/realistic terms.
>Why would they bother? Bitcoin transactions are broadcast to the entire Bitcoin network anyway. All the NSA would need is a handful of desktops and some auxiliary information about which wallets belong to which users (perhaps gather by watching Bitcoin exchanges). Bitcoin makes no anonymity guarantees at all.
Bitcoin is not anonymous, correct. That doesn't mean that it is easy to break the barrier from pseudonymous - > known identity.
Let's say there is a clever participant in the network, Satoshi, who is under investigation by the NSA. The NSA knows they will be sending 10btc to their cohort at address xyz. Satoshi is smart, he is not going to use an exchange to get his coins. Maybe he mined them. Maybe he got them in a f2f transaction.
This leaves few options to find out information about Satoshi. However, if the NSA ran a sufficient number of nodes, they could easily determine the first node to propagate a transaction. This would be Satoshi's IP address. That is why they would do this.
"This leaves few options to find out information about Satoshi. However, if the NSA ran a sufficient number of nodes, they could easily determine the first node to propagate a transaction. This would be Satoshi's IP address. That is why they would do this."
I suspect that there would be easier ways. Even just the time when the transaction occurs would reveal a data point (e.g. when the sender is awake). It also would not help much to avoid using exchanges; if the target mined their Bitcoins, then you can at least narrow them down to the people who could mine enough for the transaction (which becomes easier as transactions become larger). If the target was given the Bitcoins by someone else, you now have another transaction that can reveal some data points (e.g. when that transaction occurred, who sent the money, etc.).
Like I said, auxiliary information is key here. Sure, transactions in isolation might be hard to associate with a person, but transactions do not occur in a vacuum. If you want to speak rigorously about anonymity, you need to somehow include the notion that an attacker might have access to some information beyond the observations they make of the system; the point is that the system should not expand the attacker's knowledge (except by some negligible amount). This is the intuition behind concepts like "unlinkability" in academic work on digital cash: it should be computationally difficult to identify transactions that originated from the same spender (even better is the notion of transferable cash, which allows for "fully" offline payments; however, this has the drawback of causing the representation of the money to grow in the number of parties that have received it, and so it scales poorly [1]).
So, imagine a system where a party being watched by the NSA uses an offline protocol to pay another party e.g. they meet out in a field somewhere and do the transaction without any Internet connection. A system with divisibility and unlinkability [2] would make it hard for the NSA to track the target from the transaction, as the target could withdraw more money from the bank than he spends, and the receiver's deposit does not reveal which user sent the receiver the money (at least beyond what would be revealed by things like the timing of the withdrawals and deposits and the amount of money being deposited; the point is that the transaction protocol itself does not add any additional information). A system that supports transferable cash would take this even further: a party might receive the cash from one friend, then send it to another, both using offline transactions, and the NSA would not be able to identify "middle" party (or the "first" party that made the withdrawal).
Of course, these definitions cannot be applied to Bitcoin, for an obvious reason: these definitions call for a bank in the system, which acts as an authority on the validity of the money (sound familiar?) and which identifies "cheaters" e.g. double-spenders. On the other hand, there seems to be no good security definition for digital cash that does not involve such an authority; I suspect this has something to do with the lack of an economic theory for money with no intrinsic value and with no such authority.
No doubt there are better ways. If there were no useful data points (e.g. stolen then mixed via CoinJoin, traded atomically to another chain with less traceability then back again) then maybe it would be helpful. But then again, if it was a sophisticated user they probably wouldn't propagate the tx from their own IP. I brought it up only because it would be slightly more expensive then some other attacks.
Regardless, you are right. Absolute anonymity is not possible in Bitcoin at the moment. If offline transactions become more adept, then perhaps. But for now... not quite.
Can you explain why it is a management nightmare? You still only have to maintain a single wallet. The wallet abstracts away the fact that you have bitcoins in many addresses, so from a UX perspective, it really is no different than maintaining a single address.
And I'm not sure I understand what you mean by "weird timing attacks".
Yes, but Baidu Jiasule is an anti-DDOS system- If someone else comes along five minutes later and says they were wronged, you can just switch it over to the new person... There'd be nothing to gain by trying to cheat.
You could ask the user via email to send some small, but "unique", amount of bitcoin from that same address again and then refund it after you've verified that the person emailing you is indeed owner of that bitcoin address.
Why would a user not be able to sign the address? Every wallet I'm aware of lets you prove you originated a transaction by signing against the originating address.
No, using a unique address for every payment is very important! While it may not affect you personally, reusing addresses is very bad for overall network privacy. It makes entity resolution much easier, and breaks the property of profile unlinkability.
You should be treating addresses more like single-use, disposable accounts than longstanding pseudonyms.
You do make a good point about network privacy. If you don't generate unique addresses, you might discourage your customers from wanting to link their coins to your account (even if they have done nothing wrong, just to avoid second-order effects.)
Actually you can. Vendors who do this require payers to use a built-in functionality in most Bitcoin wallet apps to cryptographically sign a message identifying them.
However this is not very user-friendly, does not work when sending from a hosted wallet (no access to the private keys), and reduces anonymity for the vendor since everybody knows his main payment address.
The alternative is providing the sender address so that their system can identify who paid and for how much, which results in you having to identify yourself before each and every transaction (probably through a user account setting or some other form you have to fill out). This is an extra and cumbersome step so it creates an incentive to maintain a singular and constant BTC address of your own.
The rationale behind creating a new BTC recipient address for every transaction is that it doesn't matter who the sender is.
It simply just lets you know who paid you, and avoid exposing your entire revenue to everybody else to view. Additionally it makes sure that your clients aren't connected by their payments, it keeps their pseudo-anonymity.
First and foremost is simplicity for the recipient: if wallet X contains the desired number of bitcoins, the sender paid. Unambiguously. Otherwise it's difficult to tell who sent what, since you might be sending any number of pieces of coins that all make up "your" transaction, which is complex / nigh-impossible to solve without other ways of verifying (such as including a message in the transaction). This is made even more complex if you receive many transactions from many people with a single address.
Second is anonymity. If you reuse "your" wallet and it's ever connected to you, so is every transaction out of it, forever. If you value the anonymity side of Bitcoin, it's very important, but not sufficient. If you don't care about anonymity, the only other downside is that someone who gets your private key can wait until your wallet is bigger before stealing the bitcoins. If you constantly change addresses, the old private key is essentially worthless as soon as you make any transaction. Honestly that's pretty unlikely, and if they have your private key it's game over anyway, they can steal it all at any time they want.
Would you want the balance of your bank account and its entire transaction history to be publicly accessible? That's the equivalent of only using one address for everything. When you use a separate address for each transaction, it becomes much more difficult (and in many cases impossible) to link the addresses to established entities. And even if you can, the additional knowledge gained is limited.
Yes, but fundamentally they can now take your Bitcoins and provide a service in return. That's called trade. Anything beyond that basic exchange is nice, but akin to icing on the cake.
Well no, not really. How do you know a user has paid? Sure there might be a 1BTC transaction in the last 5 minutes, but is it the user who has just paid or somebody else who hasn't contacted you yet? Such simple issues are made simple by just using Bitcoin the way it was intended.
You wouldn't think such a major search company would allow one to watch movies or listen to copyright music free of charge just by clicking the 'movies' or 'mp3' search tags, but Baidu does (at least to residents here; I'm not sure if the same is possible for people outside of China).
Given that there was a bitcoin rally led by the Chinese bitcoin exchanges before this news[1] and now this amateurish announcement, it seems like somebody at Baidu Jiasule is doing a pump and dump.
That link was meant to show a suspiciously large jump in the volume of Chinese bitcoin exchanges relative to other exchanges. It wasn't intended to show the price increase.
To see the price increase, you can look at any of the charts at http://bitcoincharts.com. But since the exchanges strongly influence each other because of arbitrage, price charts won't tell you anything about the role of Chinese exchanges in the increase.
> That link was meant to show a suspiciously large jump in the volume of Chinese bitcoin exchanges relative to other exchanges. It wasn't intended to show the price increase.
It certainly sounded like that was what you intended. A transaction volume increase is interesting, but on Reddit I have read comments stating that the exchanges in some cases have started charging no fees - which sounds like it's possible that the increases are entirely spurious and due to, say, bots going nuts.
Baidu[1] is a giant search engine like Google, with a market cap of 50bn, so it's not like this is a pump and dump. I suspect the poster is just a bit 'like that'. They probably put citations in their comments.
Take a look at the services list in that article - they are like Google, Wikipedia, and Yahoo all rolled into one, and dominate the Chinese market.
I wonder how this will end up playing with the fact that exchanging CNY is heavily restricted. Exchange services all require proof of identity to allow you to trade, and there's quite a few limits on exchange.
There are some concerns the numbers are inflated i.e. they have have no conversion fee, so they could be trading with themselves to pump up the numbers.
There are other indicators that this might be legit trade volume. Things like state-sponsored media exposure, the large number of Chinese bitcoin miners, and also that Chinese are already familiar with another very popular digital currency (QQ).
But Bitcoin has three major problems. One is if you lose your key you won't be able to access your coins, right? And two, how is tax going work? Third, bitcoin price goes up and down so rapidly. Say the service costs 20BC today but if tomorrow's bitcoin price is $100USD instead of previous $50USD, the consumer will pay more (and vice versa Badiu might lose some money).
"One is if you lose your key you won't be able to access your coins, right?"
Right but that is life. Make back ups when you have something critical like that.
"two, how is tax going work?"
The same way it works with anything else. The government will come in, assert that you own X in taxes on your Bitcoin income, and you will pay it or go to jail. You will probably need to pay with something other than Bitcoin, of course, which adds in transaction fees (but you just pass that cost on to your customers, right?).
"Third, bitcoin price goes up and down so rapidly"
By extension, your prices change daily. You'll probably charge a fixed fee in your local currency (Yuan?) and adjust your Bitcoin prices according to the market value.
1) I think with future authentication technologies, this will get easier (logging in to the wallet based on a fingerprint token?). Perhaps the new FIDO standard will help here: http://www.fidoalliance.org/faqs.html
2) Taxes would work just like how you make money today from other sources, you have to declare them. Plus, wouldn't it be better if people wanted to pay taxes based on the marvelous "services" they get from the government, rather than having part of the money being taken away from them by force, and then the government spending it however it wishes, with little benefit for the tax payer? Seems to me that if the government had to convince people to pay up, instead of forcing them, they'd be a lot more efficient with that money spending, and a lot of waste would be reduced.
3) I think the more used Bitcoin gets, the volatility decreases. Right now if someone buys $1 million worth of Bitcoin, that could still have a pretty significant impact on the Bitcoin market. In the future, if the transactions are worth trillions of dollars, someone trading $1 million of them won't mean much.
1) If you throw your wallet into a well, you won't be able to access that money, either.
2) People have been bartering for centuries and taxation of barter is already well defined by government. Bitcoin transactions get handled the exact same way.
3) You're witnessing the birth of a new currency, price fluctuation can't be avoided. However, bitcoin prices will stabilize over time. Plus, there's services that immediately convert you BTC into fiat currency to avoid this problem.
Here in the UK Bitcoins fall under "Capital Gains". That means no tax is due until you sell them for cash (IANAL but this my understanding). So price fluctuations don't matter, when you chose to sell you pay capital gains.
Only percentages matter, not absolute values. It's hard to find a currency that fluctuates 50% relative to USD, but it's not completely unheard of either.
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