So, you're saying that there should be some kind of powerful institution that is capable of defending the currency against manipulation attempts if necessary and thus ensures a reasonable level of stability in said currency? This concept seems somewhat familiar, you might even consider it a crypto currency's Central Bank.

What I find funny w.r.t. to BTC et al. is that people are slowly starting to find out that living in the currency equivalent of the Wild West is not as much fun as it sounds at first. First, there were calls for more government regulation and a higher level of accountability on the side of infrastructure operators and now even the idea of some entity defending the currency against attacks seems like an attractive prospect.

My prediction is that at the end there will be an epiphany that our real world currency system is constructed the way it is for a reason. It may not be perfect, it certainly has some major flaws but at the end of the day it's still better than the alternatives.

And no, central banks are awful. That is one of the myriad reasons distributed compute power is what makes bitcoin strong. And ironically, central banks are autocratic and blockchains are democratic, while the systems that consistently produce the former are purported republics, and blockchains just come from no ideology or power structure, I guess anarchy.

> My prediction is that at the end there will be an epiphany that our real world currency system is constructed the way it is for a reason. It may not be perfect, it certainly has some major flaws but at the end of the day it's still better than the alternatives.

The current system is giving a monopoly on printing money without any backing store of value besides the confidence in the printer to a select few easily exploitable and corruptible appointed heads of central banks with no mechanism for the fair distribution of new funds. These banks then operate through violence to guarantee peoples assets to falsely make the currency look more secure than it is, by threatening you if you don't pay the taxes to recoup the losses of risk in storing your money with someone else. Is it an arms throw from the worst possible system, which would be the absence of any confidence at all, and it is only with systemic manipulation such a system still works at all. That, and the US dollar is the compulsory international currency for oil, which everyone craves like a cocaine addict without a fix.

I think that there's a certain amount of truth to this - countries are able to shape their currency according to their interests. For example, China deliberately keeps the yuan weak in order to stay competitive with exports. This tends to benefit the elite and dick over the poor. However, I think that a cryptocurrency is a bad alternative to this, due to the next point:

> These banks then operate through violence to guarantee peoples assets to falsely make the currency look more secure than it is, by threatening you if you don't pay the taxes to recoup the losses of risk in storing your money with someone else.

Having a system of enforcing contracts is essential to having a working currency. You are basically saying that banks are being evil when they repossess and foreclose on property, but if they weren't allowed to do so, they wouldn't lend money in the first place. And like it or not, credit is essential to the functioning of a society; it's been around in some shape or form since the ancient Egyptians. We've come a long way from having a private army come to your house to sell your family into slavery, but it's the same thing in principle - we sign contracts and are held to them. These contracts need to be regulated with the force of the government. There's a large web of mutual obligations here - the government forces banks to lend responsibly, and in turn the government guarantees through the courts and the police that it will enforce these contracts.

Bitcoin doesn't have any of this. And that's why it's so volatile and why speculation drowns legitimate transactions.

>Bitcoin doesn't have any of this. And that's why it's so volatile and why speculation drowns legitimate transactions.

I don't understand. Bitcoins are just an asset so they have all of this under the law. You can't steal people's bitcoins legally anymore than you can steal someone's tv or gold or whatever.

Not easier than, say, Amazon, where I buy something every week at least, have my card information saved and make sure I keep it updated when it expires, etc. But, if it's a new place, where I just have to make a one-time payment, I'll choose BTC every time if it's offered.

>I'll choose BTC every time if it's offered

I hate to break this to you, but you might be a fan of Bitcoin

But it works fine. I have like $40 in my Coinbase account. It bounces around, and I don't really keep track of it. It's not like I'm holding my savings in there. Just enough so I can make small payments when I want to.

This line of reasoning is sketchy at best given that a "decentralized ledger" could not have possibly been considered as an option when the current system was built (it was not known such a system could even exist). If you had said the same thing about email in the early days ("my prediction is that our real world mail system is constructed the way it is for a reason") you would have been dead wrong.

> So, you're saying that there should be some kind of powerful institution that is capable of defending the currency against manipulation attempts if necessary and thus ensures a reasonable level of stability in said currency?

There is a distinction to be made between a central bank that is controlled by an individual country (which may or may not be accountable to its population) and a decentralized institution that is ruled by mathematic, totally transparent and spans multiple countries.

There are also ways around the potential 51% attack threat for smaller crypto-currencies which include piggy backing off Bitcoin's network hashing power (http://bitcoin.stackexchange.com/questions/273/how-does-merg...) or using Proof of Stake instead of Proof of Work.

Not necessary. There simply need to be enough people supporting the currency at launch.

The reason I ask is because I'm curious: technological artifacts don't usually have the sharp line between life and death that most biological lifeforms do, particularly in the case of software which can potentially lie dormant indefinitely as a static bitstream. However it seems to me crypto currencies should have a sharp line, because as I understand it, the process of block mining serves as a heartbeat; the cessation of the heartbeat should serve as such a line. I'm wondering whether that is actually the case; what really happens when the heartbeat of a crypto currency stops?

http://bitcoin.stackexchange.com/questions/658/what-can-an-a...

Further, just using a new algorithm only protects you briefly, right ? Can't the pools implement new algorithms as they see fit ?

The actual mining is done by clients using software like cgminer; the pools just coordinate. If the software doesn't support a particular POW algorithm then it would have to be updated and tens of thousands of people would have to install the update. Also, there are pools that auto-switch between different scrypt currencies to mine the most profitable one, but mining software doesn't (currently) auto-switch algorithms.

Isn't Satoshi Nakamoto's design brillian!

If coin price > mining cost / 2, it becomes worth it to acquire 51% of mining capability so you can vote the other 49% to yourself, no?

But then again, once you have 51% control and everyone knows it, the value of those coins quickly goes to zero. As is probably happening with Auroracoin as we speak.

No. The most powerful thing a 51% miner can do is roll-back transactions. The currency goes back to the spender, not to the miner.

But yeah, it would seem that miners of new cryptocurrencies should expect to lose money initially.