Worldwide software update

I had an interesting thought today in relation to software updates.

If the laws of physics, say friction or gravity, were to run off software, and we had to run an update to that software..... what would that look like?

Typically we get software updates from a manufacturer, and we select when we run the update, perhaps on our computer before we go home for the day.   We update our software when it is convenient to us.

Bitcoin is a little bit different.   Bitcoin is software, for money.   One thing about money and economic activity is that you can't just simply turn it off to run a software update.

First, lets me say that we dont ever need to update the software.   The software works fine just how it is, and would operate without any maintenance from here until the end of time.

Second, software updates in bitcoin are referred to as "forks".   There are 'hard' forks and 'soft' forks.

A soft fork is a software update that doesn't change the rules of the network.  A soft fork can add features, but it cannot remove or change existing features.  These updates can be done at the leisure of the miner, exchange, or payment processor.

A hard fork is much more serious.   A hard fork must be done simultaneously around the world until there is a consensus of the miners.   With proper coordination this poses little to no risk, but if implemented poorly, could destroy everything that bitcoin has built to date.
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With a 'best case' hard fork scenario, all miners and exchanges are notified of an up and coming software update.    Perhaps a specific time and specific date.
  When the time comes, most everybody needs to shut off the current running software, run the update, then continue again.   This affects a couple groups of people.
  -Bitcoin miners need to stop, so that transactions are not verified under the old software.  Note that 100% of miners dont need to stop, just enough to stop solving blocks in a reasonable amount of time.   If 75% of miners shut down(perhaps just 5 pools), then to get 6 transactions verified would take about 4 hours.  Plenty of time.
  -Bitcoin users:  At the designated time, users are not affected, because mining and transaction verification has stopped.    It would kind of be the same as all Visa cards being declined for a 10 minute period today.
  -Exchanges.   Since the blockchain has come to a stop, incoming transactions to exchanges stop as well.

In general, under a hard fork scenario in bitcoin, the entire world would undergo a software update.   People would just stand in the starbucks line.... waiting for the go ahead.
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  The worst case scenario for a hard fork would be complete disorganization.   Miners would still verify transactions under the old software, which are then invalid once the new software meets consensus.  This would be particularly disastrous for exchanges, as they trade bitcoins for dollars, then send the dollars away only to find their bitcoins dont exist.
  For the consumer this is slightly less important.   If you paid your cable bill, then would just come back to you and have you pay it again.  If you had bought a TV, best buy would contact you asking for payment again.   This is still a chaotic environment, but still manageable.
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A soft fork doesn't really matter a whole lot..   A soft fork would add features to the network.   Miners that dont update their software done get to use those features...(i think)  Not really a big deal.   An up and coming soft fork could be in multi-signature transactions.    Transactions today require 1 private key, but the software is coming that will allow us to use any 2 of 3 private keys.    If a miner found a block without this software update, the users transaction would wait until a miner WITH the software update found the block.

 Note that multi-signature transactions are the future of bitcoin banking/security.    One private key to the owner of the bitcoins, one private key to a bank or hot wallet (coinbase) and one private key to a trusted third party, in the event that one of the three lose their keys.   Then coinbase can't run off with your coins, and neither can sombody that stole your private keys through a hack of some-sort.
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Lets have fun with this hard fork idea.   Lets say the US government invests 100 million dollars in bitcoin mining and gets 51% of the network.     Since they own 51% of the network, then update the software to increase the cap to 42 million coins, of which they automatically get 20 million of.   O NO!!

  Not really.    The only thing they did was fork the bitcoin blockchain.  Now we have BTC1 and BTC2.   Users, exchanges, miners and payment processors can then chose which version of the blockchain they want to continue with.

The Government could setup their own exchange of BTC2 if the wanted to, but nobody would use it.
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 An interesting note here.... is who coordinates updates of the sofware in the event of a hard fork?   The Bitcoin Foundation is the un-appointed lead development team for bitcoin, however what if they want to run a software update nobody wants?   It is a serious concern.  
  Where I see this going is decentralized development.   There will be many many bitcoin foundations throughout the world.   One for each country, that may have each countries own interests in mind.    Perhaps all the bit coin foundations of all the countries would lead, democratically, software updates.    If those foundations cannot come to an agreement, the software doesn't get updated.... which is just fine.    I say its fine, because 2nd tier services and do ANYTHING that a software update can do. (I.E. coinbase can make their own rules for coinbase).   The free market will decide....
 

Lets Print 1 Trillion a MONTH!

shocking...

http://www.nytimes.com/2013/10/27/business/economy/in-fed-and-out-many-now-think-inflation-helps.html?pagewanted=1&_r=0

You are here.

  Just by simply reading this post, it is my opinion you are at the beginning of a HUGE technological adoption curve.   This is an image of the rate of adoption of new technologies.



  I mentioned to one of my buddies last night, whom is part of my generation, that we've all asked these questions.

Do you have a computer?   in 1995 this was a valid question.  Today it is just assumed.

Do you have the internet?  in 1997 this was a valid question.  Today it is just assumed

Do you have an email address?  in 1998 this was a valid question.  Today it is just assumed.

Do you have a cell phone?   in 2003 this was a valid question.  Today it is just assumed.

Do you have a paypal account? in 2003 this was a valid question.  Today it is just assumed.

Do you have a facebook account  in 2008 this was a valid question.  Today it is just assumed.  We are still working on this one.

Do you have a smart phone? Today this is a still a valid question, but its going towards assumption.

I believe the next question is... Do you have a bitcoin wallet?

Or perhaps people out there believe that we have maximized our technological advances capable via the internet and we "done" being more sophisticated.....


Here is another image from this website, which is a good, short read.  link

The recent price increase.

Bitcoin has been on pretty much a tear in October.   We're up about 40% since October 1st.

 I believe this to be due to a number of reasons

1) Increased adoption by retailers, eGifters walmart gift card, point of sale integrations, etc

2) China's "Baidu" has begun to accept bitcoin as a payment method.
     -Alot of the current rally has been led by China, they have been breaking volume records on their exchange..

3) The shutdown of the silk road got a 'stain' off bitcoins track record, and paraded it through the media for two weeks.   I had no less than 10 people ask me about bitcoin because of this story.   Media attention is good for bitcoin price, leading to more media attention.

4) The US governments dysfunction.    If you think the government will continue to be dysfunctional, invest in bitcoin, because bitcoiners dont give a rats ass what the government does.   We've "opted out" of the system, and chosen not to participate.   The more dysfunctional they are, the higher the price of bitcoin.

5) The nomination of Jannet Yellen as federal reserve chairman.   She will probably be responsible for more money printing than anybody in history.   This drives inflation, and drives people to secure assets (gold, silver, bitcoin).    Again, bitcoiners have "opted out" of the system so we dont care.

6) The continued dysfunction of ALL governments world wide.    Argentina LOVES bitcoin.

7) The Chinese government had a press release saying "we need to de-Americanize the world, and we need to use a "super sovereign" currency.link. read it seriously   How would one develop a "super sovereign" currency.   A currency that cannot be manipulated?   Sovereign meaning "self governing, independent"
    -Bitcoin is essentially an un-manipulatable database.   There is no way to change a block once its written.   Could it be used as a database to track world trade?     Once this current 'trust based' world trade system breaks, i'm pretty sure we'll move to something that is a 'trustless' system.   That means that because I cannot trust one person(or group of persons) I will design a system that trusts nobody.

I see the recent run up in price as more of a 'correction'.   This software has the ability to change the entire world, yet we get a 2 billion dollar market cap.   Facebook has a 90 billion dollar market cap with 700 million people posting lolcats on their pages.  Bitcoin will defund world governments and will stop endless war.
   A string of good news for bitcoin, and bad news for world governments has led this rally.   I do however think this is just getting started.   Once the price breaks 267, it will be a new high.    It will get run through the media, fuelling it to further highs.  I would bet somebody lunch that we will be at $500 by the end of the year, which BTW will only be a 6 billion dollar market cap.  This idea is just too big to be valued so small.

The first bitcoin bubble the price went from $2 -> $32, followed by a crash.   Bubble caused by media attention for the silkroad. This was a 16x return.

The second bitcoin bubble went from $32-$266, followed by a crash..   Bubble caused by Cryprus event.  This was an 8x return.

The third bitcoin bubble will have price going from $135 --> ???? followed by a crash.   Caused by the events described above. Perhaps we get a 4x return on this bubble, with a peak price of $540??

Cornerstone Money Post

This will be a huge post, and a challenge to people that I know.   The challenge is to sit down with somebody and watch these series of videos.   It will take 2 hours.  Instead of watching  "Survivor" tonight, lets educate each other.

No economics teacher will disagree with ANY of the information in these videos.   I agree with all the information in these videos.   The only people that disagree with the information in these videos are central bankers.   This guy teaches the truth, with no exaggerations.or deceit..

Pop some popcorn, grab a beer, sit down with a significant other and take two hours.  Note that these were made around 2011, and bitcoin as a project was just getting off the ground.    In video 3 he produces 4 possibilities for the new monetary system of the 21rst century.   I believe there is a 5th option now, based on the internet, through bitcoin.

I'll also through out a note that these guys are trying to get you to buy gold/silver from them, and you can see a tiny bit of advertising, however it is not intrusive or annoying.


 

The future of the internet?

I have no ability to do this... but I feel its an interesting concept that could be the future of the internet.

decentralized mesh networks monetized with bitcoin.

Through a combination of a tor like browser, high strength wireless routers, and monetization through bitcoin, one could have neighborhood area wifi.

Idea is an internet “miner” hosts has an ISP and a high strength antenna. get neighbors to connect through the miners antenna, and they pay per kilobyte of data transfer.

With bitcoin and micro transactions, internet users can pay for internet usage on a very small scale.

Want to load facebook? That will be 1/100th of a cent please.

The neighborhood internet “miner” could also host data that could be further monetized. If you want to host 10TB of web pages, one could further monetize access to that data. Facebook server farms wouldn’t be monetized with advertisements, they would be monetized by internet access. Netflix is paid for by access to their data, not with a subscription plan. Content providers are monetized by the value of their data (new york times, netflix, music/bands , youtube, etc)

Through a P2P technology, when you add storage to your internet ‘mining’ setup, it downloads the most accessed web pages in your area, reducing ping. (web pages updates would be problematic, or only hosted on corporate servers)

Through a tor style ‘onion’ type encryption, the consumer sends 1/100 of a cent with his request to netflix. In a way, distance from data centers would reflect the cost of access to that data. Home values near data centers would raise, because they have easier access to that data.

High strength wireless antennas begin to connect subdivision to subdivision, neighborhood to neighborhood, city to city and state to state. Cell phones begin to connect as a VOIP and each minute costs fractions of a penny. Verizon, AT&T get disrupted as their service is no longer relevant.

Consumers perhaps have cheaper access to the internet, or at least one that’s based on usage, and we get a decentralized internet. New professions arise in local internet hosting building and hosting. Data centers start popping up in shopping malls near local communities, selling access to that data.

I love the potential economics behind it. We live in Oregon and want to access data from New York. That data would cost a lot of money because it has a long distance through the network. Say it would cost 10 cents per kilobyte. A local internet miner sees a profit opportunity, and opens a satellite based ISP to reduce the cost.

In general, it could give consumers options. We would still have frontier as an ISP option, but in the event that gets censored there are other options.

3 reasons why Fed may not taper until 2014

shocking.... absolutely shocking..

3 reasons why Fed may not taper until 2014

First they say 'September"

When September comes, Bernake play a good old switch-er-roo on Wall street and says "fooled you".  He does not taper.

In reality, he will never taper, because as soon as he does, the US Government starts to default.  If you didn't read my previous post on why, how dare you.   But as a reminder.

At what rate would an average investor loan money to the US Government?

17 trillion in debt x 6% interest rate = 1 trillion dollars in interest (gov income only 2.5 trillion, spends 3.4 trillion)

To keep interest rates low, they print money
17 trillion x 2% interest rate = 140 billion in interest.

Lets not even talk about actually paying their debt down....

The Silk Road

  Bitcoin has huge news yesterday.   Perhaps the biggest news since I've been watching it around April.

The Silk Road has been shut down.

For those that dont know, the Silk Road was an illicit drug market.    Users could covert their fiat dollars to Bitcoin, go to "ebay" style drug website, select their products, pay in bitcoin and receive their goods in the mail.  Yes... it was mail order drugs.... the real kind.

The website was suppose to be "un-shutdownable" due to bitcoins "un-stoppableness" and TOR's "privacy"

Regardless, the FBI found the guy running it because he had made a couple HUGE mistakes, neither of which had anything to do with Bitcoin.*  There was nothing wrongs with Bitcoins security.

The reaction of the bitcoin market was a drop in value of around 40% in the short term.  Today its only down about 10%.

This is both good and bad for bitcoin... here is why.

The Bad:
   The Silk Road was opened in 2011, and was perhaps the first proof on concept of the power of bitcoin.   Users of Bitcoin can spend them wherever they damn well please without government interference.    In two years, the silk road had handled about 9.5 million bitcoin.   There are only 11.7 bitcoin available right now, so about 80% of all bitcoins have travelled through the silk road.   If you have 10 bitcoin, 8 of them on average have travelled the silk road.
   Two years, silk road may be been 90% of the utility of Bitcoin.   Most users and holders of Bitcoin probably only used them for the Silk Road.... this has lead to Bitcoins reputation of being used to buy drugs.   Just refer to any CNN article or any main stream media article and it will reference using bitcoin to buy drugs, because in 2011 that was all it was really good for.
  Fast forward to late 2013, and perhaps only 10% of bitcoin is used to buy drugs, but we still have this bad reputation... which leads to the good.

The Good:
   The reputation of Bitcoin was improved yesterday with the shut down of the Silkroad.    The main stream media can now dis-connect BTC and the Silkroad because the Silkroad no longer exists.  This is good in the long term.  Yes you can still buy drugs with bitcoin on other markets, but they are small and not well known.
   Why would Amazon, Paypal, or Google want to be associated with a currency that "was" only used to buy drugs?   Thats just bad business.  
  I believe that with Silk Road out of the way we now have fewer barriers to mainstream adoption.
  In the short term, yes the value is down, but it will only take one company to take bitcoin to drive its price to the moon.    It almost seams as though bitcoin was designed for Amazon.com or Paypal.

The Neutral:
    I 110% guarantee you that "The Polyester Road" began being designed yesterday.   The profit margins are too huge to assume that there will be no black market.  It will come back, somebody just needs the time to design it.   This person will also not be as stupid as the guy that ran the Silk Road.