Is Anyone Using bitcoin in a useful way without tying it to real money?
January 12, 2015 8:05 PM Subscribe
Are there any examples of people using digital currencies to do things without relying on "real money"? Is there any practical cryptocurrency usage that doesn't meet up with a marketplace exchange for a country-backed currency?
I have a vague understanding of bitcoin/cryptocurrencies (or whatever you want to call other digital currencies that rely on consensus algorithms or solve the byzantine generals problem), so I'm trying to get more concrete examples of how they can be useful. I know there's a startup called Ethereum that does things like build some kinds of digital contracts, but I haven't been able to find a good clear example of using a cryptocurrency for something like.. voting up/down comments or something "practical and somewhat commonplace" that might sound useful to someone who isn't into bitcoin just because it sounds cool.
I have a vague understanding of bitcoin/cryptocurrencies (or whatever you want to call other digital currencies that rely on consensus algorithms or solve the byzantine generals problem), so I'm trying to get more concrete examples of how they can be useful. I know there's a startup called Ethereum that does things like build some kinds of digital contracts, but I haven't been able to find a good clear example of using a cryptocurrency for something like.. voting up/down comments or something "practical and somewhat commonplace" that might sound useful to someone who isn't into bitcoin just because it sounds cool.
I don't know if it's what you're looking for, but when I started experimenting with cryptocurrency one of my ground rules was “no putting real money in”—I would try to do everything else but not convert dollars to fake-ish money.
Because of that, when I one day used bitcoins to buy a physical object from a brick and mortar store in a face-to-face transaction at the counter, it was with pure profit from mining. Since I just did it once I don't know if you'd call it practical but there was no exchange involved tying it to any country's currency. (What the store did with it later I can't say.)
(It was a gaming store, by the way. I bought a set of polyhedral dice. Using bitcoins for that was the nerdiest thing I've ever done.)
posted by traveler_ at 10:00 PM on January 12, 2015 [10 favorites]
Because of that, when I one day used bitcoins to buy a physical object from a brick and mortar store in a face-to-face transaction at the counter, it was with pure profit from mining. Since I just did it once I don't know if you'd call it practical but there was no exchange involved tying it to any country's currency. (What the store did with it later I can't say.)
(It was a gaming store, by the way. I bought a set of polyhedral dice. Using bitcoins for that was the nerdiest thing I've ever done.)
posted by traveler_ at 10:00 PM on January 12, 2015 [10 favorites]
What counts as a "tie"? If I sell alplaca-hair socks, and I feed my alplacas (or myself, for that matter) with grain purchased in dollars, is my subsequent sale of the socks to you "tied" to government-backed currency?
posted by phrontist at 10:09 PM on January 12, 2015
posted by phrontist at 10:09 PM on January 12, 2015
Response by poster: Phrontist, traveler_, I'm looking out for uses that aren't bartering goods -- activities that are enabled by digital currencies that aren't really done well by actual currencies. So if there's a micro-transaction system out there that can help filter out email spam because there's a digital cost to sending emails that is verifiable (an activity that isn't done well with actual money and existing third party escrow schemes), that's the kind of thing I'd like to know about -- if such things exist.
The example of keybase seems good. But maybe someone can better explain the problem (like I'm 5yo) that is solved there that can't be solved without bitcoin? How is keybase better than other methods that try to do the same thing (before bitcoin existed)?
posted by mhh5 at 12:15 AM on January 13, 2015
The example of keybase seems good. But maybe someone can better explain the problem (like I'm 5yo) that is solved there that can't be solved without bitcoin? How is keybase better than other methods that try to do the same thing (before bitcoin existed)?
posted by mhh5 at 12:15 AM on January 13, 2015
Best answer: Namecoin is a bitcoin fork used to register .bit domains. Basically all it is is a name registrar. You mine to get namecoins, then use the namecoins to register a domain name. Pretty simple and effective, really. Nobody, of course, uses the .bit domain, but as a proof of concept, it's great.
The advantage of this over ICANN is that it's strictly first come, first serve, and there's no censorship, and no relying on a central authority or government.
posted by empath at 7:06 AM on January 13, 2015 [1 favorite]
The advantage of this over ICANN is that it's strictly first come, first serve, and there's no censorship, and no relying on a central authority or government.
posted by empath at 7:06 AM on January 13, 2015 [1 favorite]
On explaining Keybase's use:
The problem has to do with "How do I prove that Twitter account X, Github account Y, & encryption key Z all belong to the same person?". Keybase has you put a signed chunk of text where everyone can see it, saying "I am X person", and the server verifies that the signature is correct.
But what if you don't trust the server, and the server may be replacing it with something else?
Then you check the published server-root, where it publishes the root of all the transactions. (If you have the root, you can catch the server if it's lying)
What if they have two roots, showing you one version and everyone else another? ((Here is where the Bitcoin thing comes in))
In that case, what they do is they also publish the root to the Bitcoin blockchain, where it gets copied and signed and copied by miners, so that the root can't be taken back and changed. Bitcoin, in this case, acts as a public record of permanence.
Since it's unlikely that your adversary could change everything in Keybase, *&* control the Bitcoin blockchain, you can be confident that the person you're sending a message to is who they say they are.
posted by CrystalDave at 2:00 PM on January 13, 2015 [1 favorite]
The problem has to do with "How do I prove that Twitter account X, Github account Y, & encryption key Z all belong to the same person?". Keybase has you put a signed chunk of text where everyone can see it, saying "I am X person", and the server verifies that the signature is correct.
But what if you don't trust the server, and the server may be replacing it with something else?
Then you check the published server-root, where it publishes the root of all the transactions. (If you have the root, you can catch the server if it's lying)
What if they have two roots, showing you one version and everyone else another? ((Here is where the Bitcoin thing comes in))
In that case, what they do is they also publish the root to the Bitcoin blockchain, where it gets copied and signed and copied by miners, so that the root can't be taken back and changed. Bitcoin, in this case, acts as a public record of permanence.
Since it's unlikely that your adversary could change everything in Keybase, *&* control the Bitcoin blockchain, you can be confident that the person you're sending a message to is who they say they are.
posted by CrystalDave at 2:00 PM on January 13, 2015 [1 favorite]
This might count as tied to real money, I'm not sure: A friend and I live in different countries and sometimes request the other to buy/send something that is not available in our country. Rather than pay transaction fees and currency conversion fees, we each have some bitcoin, and pay by sending however many bitcoin would trade for the real-money amount at the exchange rate of that time - but we're not necessarily buying or selling bitcoin or converting it to/from real money, just sending it back and forth between ourselves.
Whether the other person actually converts the coin to money or leaves it in their wallet to send back when they want to buy something, that's up to them.
Our payment is based on the current-real-money value of bitcoin, but does not necessarily involve real-money.
It's probably not significantly cheaper and easier (if at all) than sending payment the old way, and even if it is cheaper and/or easier, it's not cheaper-enough or easier-enough to make a compelling case for doing it - part of the justification is simply that it's interesting to try this new approach.
Of course, "F*** Paypal!" is a justification I can see many people finding to be extremely compelling :)
posted by anonymisc at 5:16 PM on January 13, 2015
Whether the other person actually converts the coin to money or leaves it in their wallet to send back when they want to buy something, that's up to them.
Our payment is based on the current-real-money value of bitcoin, but does not necessarily involve real-money.
It's probably not significantly cheaper and easier (if at all) than sending payment the old way, and even if it is cheaper and/or easier, it's not cheaper-enough or easier-enough to make a compelling case for doing it - part of the justification is simply that it's interesting to try this new approach.
Of course, "F*** Paypal!" is a justification I can see many people finding to be extremely compelling :)
posted by anonymisc at 5:16 PM on January 13, 2015
Response by poster: anonymisc, That's counts as tied to real money -- you're actually consulting real-money exchange rates to do the transaction. I'm looking for activities that *can't* be done with "real money" in a convenient or practical way. So far, Keybase and Namecoin seem to fit my criteria. However, I was sorta hoping for examples that sounded a bit more useful....
I happened to come across another example recently -- IBM proposing a blockchain to use with an Internet of Things as a cheap way of storing and securing data from all kinds of connected devices. (But I only saw that because the guy who was in charge of that project is leaving IBM, so maybe that project isn't going anywhere..?)
I also found another list of activities that bitcoin/cryptocurrencies can enable, but these aren't specific examples, just things that *could* be done if someone wanted to:
* contracts
* shareholder agreements
* prediction markets
* voting systems
* domain registries
So Namecoin is a specific example of a domain registry.... and I'm looking for more specific examples for some of the other activities (not just limited to that list). Is there a voting system that relies on a blockchain? Hypothetically, a voting system could be accounted for with a blockchain, but is anyone actually using such a system in the real world?
And I've seen some suggestion that a will could be stored in a blockchain.. but would that actually be legal or practical? Is anyone actually doing that?
posted by mhh5 at 1:06 PM on January 14, 2015
I happened to come across another example recently -- IBM proposing a blockchain to use with an Internet of Things as a cheap way of storing and securing data from all kinds of connected devices. (But I only saw that because the guy who was in charge of that project is leaving IBM, so maybe that project isn't going anywhere..?)
I also found another list of activities that bitcoin/cryptocurrencies can enable, but these aren't specific examples, just things that *could* be done if someone wanted to:
* contracts
* shareholder agreements
* prediction markets
* voting systems
* domain registries
So Namecoin is a specific example of a domain registry.... and I'm looking for more specific examples for some of the other activities (not just limited to that list). Is there a voting system that relies on a blockchain? Hypothetically, a voting system could be accounted for with a blockchain, but is anyone actually using such a system in the real world?
And I've seen some suggestion that a will could be stored in a blockchain.. but would that actually be legal or practical? Is anyone actually doing that?
posted by mhh5 at 1:06 PM on January 14, 2015
Response by poster: Here's another example I found randomly: http://twister.net.co/?page_id=25
But again, it's not really being used by too many people...
posted by mhh5 at 3:20 PM on January 21, 2015
But again, it's not really being used by too many people...
posted by mhh5 at 3:20 PM on January 21, 2015
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posted by CrystalDave at 8:39 PM on January 12, 2015 [1 favorite]