Saturday, December 1, 2012

A Serious Problem for Bitcoins?

How do you access your funds when the government shutsdown the internet?


  1. I think Sudeep is Helen's nephew.

  2. That's the key reason why I will stay away from Bitcoin, even though the concept is a good one. Bitcoin and the modern financial system in general are now hostage to a working internet.

  3. You know I was just thinking of that this morning.

    Also, I thought how MAC computers were practically 'unhackable' for a long time. The truth behind that was it wasn't worth the hackers time since so few people utilized MAC. Nowadays, and especially in the future, they will be much more 'vulnerable' as everyday families and many firms make it the home computer of choice.

    Where am I going with this?

    If Bitcoin were to become wildly successful that would provide a LOT of incentive to hack it. It may be credible as a money in many ways but I do not think it's 'durability' or 'stability' will qualify it as one.

  4. Guys, internet networks for bitcoin or any service can always fall back to dial-up or mobile networks.

    My God! How else do liberty groups in totalitarian police states like Cuba get the word out?

  5. In this particular regard, Bitcoins are no more vulnerable than the rest of the financial system. If authorities were to close down the internet, how safe is any wealth you have stored electronically?

    The value of Bitcoins is in the information and the quantity is tied to the wallet address. The only way would lose your Bitcoins is to lose your wallet address. You can memorize your address, destroy all electronic copies of it, then use the address to get your wealth someplace else there is an internet connection. Bitcoins will be easier to smuggle across borders than anything else ever invented.

  6. The "internet" is not necessary for bitcoin to survive:

  7. Bitcoin has no central servers and your encrypted Bitcoins remain on your computer. So accessing your money isn't the problem. Rather, transmitting money is the issue. However, under similar circumstances, this will be a problem for all currencies.

  8. The question, "how do you access your funds when the government shuts down the net?" applies to ATM networks and traditional banking just as much as it does to Bitcoin.

    In fact, I just had a problem withdrawing funds from a Bank of America account not too long ago because their regional server had blown a gasket.

    Bitcoin even has some advantages here. While it's true you need net access to transfer funds, the client doesn't need global internet access to operate. Two parties can exchange coins on a local network without having to see other clients in foreign countries. It's just that it may take longer for the transaction to process since there are less miners and clients available to process the transaction.

    Of course, purists will point out that gold or cash doesn't need any power to operate, to which I say, try and ram your gold down a transmission wire. Gold has its place as a currency, and so does Bitcoin.

  9. Many possible solutions/workarounds are being discussed here:

  10. Here are some projects currently underway which are working to build a decentralized internet:

  11. You mean problems other than once someone hacks Bitcoin's vaunted unbreakable encryption it'll be more worthless than it is now?

    1. If Bitcoin's encryption is ever broken, the rest of the financial world will also be in trouble as they use the same grade of encryption that are used for bitcoin's private keys.

      I've quadrupled my investment in Bitcoin. I can't say the for any other investment except for the silver I bought 10 years ago.

  12. One of the most remarkable aspects of Bitcoin is its censorship resistance.

    First, any bitcoins stored in the blockchain will be safe. Private keys can be created extremely easily and securely using tools like (the code is open-source and can be downloaded so an Internet connection is not needed if one prepares before hand by making a brainwallet and establishing the 'firstbits' for easy payments).

    Second, is the ability to transfer bitcoins and use them as a currency. This is where Bitcoin's censorship resistance takes on Godzilla like attributes compared to alternatives like cash or gold which can exist only in one place at one time and are easily identified due to their physical nature.

    Using the source code from it is possible to generate Bitcoin transactions offline. Then all that is required is to broadcast the transaction to the network.

    Jack mentions a few of the great alternatives like the mesh net, bitcoincard, etc. A local mesh net could be setup and cover a large distance, many square miles, and there would only need to be one connection to the worldwide Internet and transactions could be submitted and processed. They could also be collected and batched; this would allow trade to take place and eventually be settled. Because Bitcoin transactions are small, usually less than 1,000 bytes which is tiny, they can easily be submitted via an Iridium phone or via satellite.

    Third, Bitcoin coupled with some of the innovations in Open Transactions,, and you could have a very powerful way to route around the politicians and Praetorian Guard. Bitcoin is already being largely used as a 'settlement currency' in a lot of cases in conjunction with Open Transactions.

    For an overview of Open Transactions watch this interview:

    So, in conclusion, Yes, it would be inconvenient if the Internet were drastically limited by State actors. Bitcoin could still be used pretty easily if one were prepared (had source-code and an Iridium phone). In my opinion, the main problems would not be with using Bitcoin but the general economic environment of the area.

  13. The real question is why do people who do not use and who have never used Bitcoin keep asking these absurd hypothetical questions about it?

    I really do wonder; has the person posing this question downloaded the Electrum client or the Bitcoin client, run it, received and send Bitcoin with it? Anyone who has done this understands how it works, what its strengths are and what Bitcoin is for. Anyone trying to take Bitcoin seriously should do some test transactions to see what is really like instead of writing in a vacuum.

    These hypothetical questions are simply absurd, and can be posed in relation to just about any technology that requires electricity.

    When EPJ posts a Bitcoin address for donations, we will be sure that Bitcoin is understood on some level, and we will probably never see posts like this again. There is no substitute for first hand experience, and with free software there is no excuse for not taking advantage of it.

    Keep the Philosoraptor musings for the laughs; talk seriously about Bitcoin, or leave it alone.

  14. The solution may simple: private space-based internet based on a constellation of modern picosatellites the size of a grapefruit, essentially wireless servers the size of a mobile.
    It was done for Iridium ages ago, when it was a breakthrough, and now it is all made in China. A privately-funded encrypted space-based wireless network with full privacy of communication and storage, literally outside each and every jurisdiction -- a perfect infrastructure for an almost perfect monetary system. Where is the fabled private sector initiative to do that, 12 years into the 21st century, when technology is affordable enough for students to play with? Behold, what could be a space-based private bank with a digital vault: