http://www.weusecoins.com/ The new concept in cyber money is called Bitcoin.This enables direct purchaser to sales transactions with no bank middleman fees.While they assure us that the amount of Bitcoins are limited by credits generated by contributing members,what central authority makes sure that the money produced will equal productivity?

The US Federal Reserve has lost all credibility in creating too much money to bail out the worthless derivatives of Wall St.Can a new private monetary system work without Govt or Banks operating as intermediaries?

Some Pacific Islands use shell money.
Not a chance it or your on line cash will buy any thing from me.

Belly the concept is taking off.Satoshi Nakamoto began the concept 2 yrs ago.He has used his knowledge of computer cryptology to invent a currency that cannot be forged. I'm not sure of how the mining coins concept works but this is the mechanism by which new coins are added to the system.Only 21 million coins will be added to the system so it seems it will not be used as store of wealth.

I'll be interested to hear from anyone who has used the system.They obiviously are far from reaching critical mass.ie having enough confident users for everyday transactions.When the Department and grocery stores accept it as payment,then the Banks and Credit card companies will be rocked to their foundations.

I'm curious.

Having read the documentation carefully, I still don't know how it works, or why it is better/handier/safer or whatever, than money. I certainly couldn't explain it to anyone else.

Can you help with this, Arjay? Or are you in the same place that I am - intrigued, but puzzled.

I suspect, though, that if neither you nor I can understand it, it is unlikely to take off.

This mining of coins Pericles puzzles me also.What productive work is proven to justify the creation of new coins? I think that the concept if sound,is a great idea.You can convert from other currencies ie Euro $ US etc It seems that initally small transactions will be the norm but he has to spend a lot on advertising to make it universally acceptable and how does he make a profit if the service is basically free?

That's why I'm asking the question; Has anyone has used it?

Interesting concept Arjay. I listened to the link twice and don't understand what one has to produce or provide (service?) to amass the bitcoins. The narration suggested one built up bitcoins based on providing some sort of open source contribution (free access?)but I am still none the wiser.

Also you can trade bitcoins for currency - that can ony happen with the involvement of banks.

There has been a non-currency system in Australia for a while - Local Exchange Trading Systems otherwise known as LETS. LETS trades in points for labour, services or products eg. you babysit my kids and I will mow your lawn, swap a basket of veg/eggs for some meat, repair my fence in exchange for cleaning your house for a month etc. It is based on the agreement of the two parties on what they think is fair, some smaller communities set up parameters for what different services might be worth but it is essentially whatever is agreed.

http://www.lets.org.au/
http://en.wikipedia.org/wiki/Local_Exchange_Trading_Systems

The area my father lives uses the LETS idea a lot. One woman built much of her entire house using LETS and trading/swapping labour or goods.

The government at one point floated the idea of taxing this non-currency system when it seemed to take off in Australia in the 70s, and probably would have found some way but for the strong opposition the proposal aroused. How an earth would you police it anyway - it is nobody's business if two parties swap labour to get a job done.

Pelican,Go to the end of the clip 'What is Bitcoin' and click on the second clip "Bitcoin New Digital Currency Explained.'

"New transactions are collected in the block by the node.As a reward for participating in the network the node adds one additional transaction to the block,assigniing 50 additional Bitcoins to his own personal address.

What is keeping the nodes from flooding Bitcoin nodes with new blocks?
Ans,All nodes are doing the same thing but only one gets the reward.The ingenious principle behind Bitcoin is the proof of work algorithm by which the node has to authenicate the block,like check sum #.The proof of work # is very difficult to calculate and therefore requires worker or CPU time from the nodes computer.The amount of work required is essentially probabilistic.The chance of finding the # is proportional to the amount of CPU cycles the node computer spends finding the #.

The node that finds the # first,will transmit the block to the network where it will be received by the other nodes.Each node checks whether the proof # is valid for the block.Each node records a chain of blocks that registers all the transactions that have taken place on the Bitcoin network.

So essentially it is a money program that links computers with no central authority and uses this self verification system to keep it honest.As to the reward system and the growth of new money,I don't really understand it.What they are saying that it is virtually impossible for Govts or Banks to shut it down.

As you have noted there is much bartering of services that the Govt does not know about.If they can keep it honest then it would be a great hedge against inflation particularly in the USA.Something like this,could well save their economy.

Ask around.I'd be interested to hear from someone who has used this system.

Aside to the Bitcoin concept, yet another great 'opening/link' for hackers around the world, adding more personal details, credit card details, phone numbers, names, addresses from personal computer hardware and software.

To date, Telstra, most phone companies, credit card corporations have sold out and given out (for products) most Australians' personal details including email addresses.

Our private info as we speak is being viewed all around the world.

The fraud/hacking of Sony is just a fraction of what will occur in future.

Facebook signage (albeit not Facebook's fault) has 'linked' peoples systems right around the world with hacking businesses/Criminals enjoying field days/a lifetime of fraud wealth set up for them, all at their finger tips.

weareunique,In this system there is the whole network verifying the validity of transactions,so there is far less chance of counterfeiting or fraud than some central authority like the US Federal Reserve having control.I think it is worth investigating.

I smell a PONZI!

You may be right csteel.Apparentlty Satoshi Nakamoto has pretended to relinguish power of his central authority of this process but in reality has not.He does not say how it finances itself to exist.That is why I'm cautious.

I'm still interested though in the software concept of having a direct money exchange via computer.We cannot trust the US Federal Reserve to keep the balance of money in our economies.If the derivate market collapses then,our economies will be flooded with worthless US $. We need a new system.

I think you may be wise to de-emphasise this, Arjay. The more you look for Satoshi Nakamoto the less you seem to find. No-one is even sure whether that is a real name, or even if he is Japanese.

Most odd. But thanks for alerting us to the concept of peer-to-peer money, I suspect we will be seeing more stable versions appear in years to come.

But please don't get carried away with the idea that it is somehow external to the financial system. Even if such a concept is adopted by you and me, the chances of it surviving at a more significant level than as barter-substitute, without regulation, are zero.

The taxman can already ping you for receiving "value" rather than folding money. This will be no different, I promise you.