Bitcoins can now be used to pay for Domino’s Pizza
digitaltrends.com
digitaltrends.com
I'm kind of disappointed with your attitude towards bitcoin since I otherwise highly respect your writings and opinions. A software entrepreneur should see the things that bitcoin can potentially enable. Just that it is now just used by black markets and some tech freaks, doesn't mean that this will be the case forever.
The good ones also understand business.
And Bitcoin as a brand is strongly associated with illegal activities.
One thing that leaves a nasty taste in my mouth is that Bitcoin encourages people to use services that would otherwise be referred to as money launderers, all in order to try and guarantee their anonymity.
It's not clear to me what services would otherwise be referred to as money launderers, or how they are promoting anonymity. Paypal? Mt.Gox?
Is it money laundering when you buy Dominos gift cards, or phone cards? Pre-paid mobile phones that you can recharge using cash at any gas station? Web hosting from GoDaddy?
I could have phrased that better. By "bitcoin encourages," I meant some of the community, e.g.:
https://en.bitcoin.it/wiki/Anonymity
It's not clear to me what services would otherwise be referred to as money launderers
"Mixing" services.
Is it money laundering when you buy Dominos gift cards, or phone cards?
If the purpose behind doing so is to launder money, then yes, absolutely - why wouldn't it be?
https://en.bitcoin.it/wiki/Mixing_service I had never heard this term before.
https://en.bitcoin.it/wiki/Anonymity The link you passed seems to start with the misconception that Bitcoin is actually anonymous -- that users of Bitcoin might come because they think it makes them more anonymous.
I was also interested to read http://en.wikipedia.org/wiki/Structuring Did you know it's called "smurfing" when you read and understand the law, and make your deposits in such a way that they will fly under the radar?
Money laundering just seems like such a nebulous crime to me. Maybe it's because I've never imagined having enough money to bring the scrutiny of federal agencies down on me. I'm still paying so much interest every year in federal student loans, at the end of the year they actually pay me just to have a job and keep it.
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That's not what I thought was freaky. It's that it's actually called 'smurfing.'
You can't disagree that money laundering is a nebulous term! My understanding is that if you're not doing anything illegal in the first place, then it's not illegal, or money laundering, to attempt to remain anonymous and make your transactions anonymous, however, if you are attempting to make your money less traceable because you want to cover up your illegal activities (say tax evasion), then it's an extra charge for the district attorney to get you with.
Have you ever heard of being charged with conspiracy after the fact, when you've already been exonerated of the charge that you supposedly conspired to commit? It happens.
That is vastly different argument than as labeling bitcoin as a toy.
In fact, your USD pizza parlor example is actually more complicated than you make it sound -- tomato prices, wheat prices, etc all fluctuate based on supply and demand.
I think this is a place where web entrepreneurs get confused because their high margins and large suppliers do such a good job isolating them from the problem: if web profit margins were 10% over the cost of hardware, and if you were running your own servers, you'd be exposed to the fluctuation of energy and bandwidth prices... you'd have the same problem predicting how much it would cost to serve a web request. (I imagine Google actually faces problems like these because of their scale).
So it's not like these problems don't happen when you use USD... it's that your margins are so high, and your providers are so good, that you've forgotten the problem existed in the first place. #firstworldproblems
For those curious how these sorts of problems are handled by non-web companies, the answer is derivatives. Apple will hedge their USD -> Yuan conversions as necessary with currency options, Dominos uses wheat futures, the farmers supplying wheat to dominos are using oil futures, and the oil company will have currency hedges for the 50+ countries they operate in. By buying and selling risk, companies are able to give you the feeling that prices are stable. Even though prices aren't stable.
If you'd like to do something like this for your bitcoin site, you should check out https://icbit.se (a bitcoin derivatives exchange)
There are a group of people who think that currencies should be connected to the value of gold.
But if you work out the price of currencies in say oil, or shares, then no currency maintains a single price for 24 hours.
So if you only have a mobile (and this is the government) they would also have your current position.
Sounds like a great deal: Free Surveillance with every Large Pizza + Coke.
I think you may have misunderstood Bitcoin; you realise it's not anonymous, right?
You can make it more difficult to link your accounts together by never transferring funds between your different accounts, but then how do you fund your accounts? It just gets more and more complicated.
I don't really think Bitcoin will bring an end to "Follow the money".
But I think the study you actually want might our study, which focuses on anonymity: http://anonymity-in-bitcoin.blogspot.ie/2011/07/bitcoin-is-n...
I might be biased, but I think we deal with most of the points JGarzik mentioned in our paper.
But we're not 'the Feds'; perhaps silverstorm was thinking of this story: http://www.wired.com/threatlevel/2012/05/fbi-fears-bitcoin/
http://www.amazon.com/Differential-Cryptanalysis-Data-Encryp...
The way to get around this is to generate many wallets and move things around a lot. However it's still money moving within a subset of bitcoin wallets, so potentially trackable still (Google is able to detect 'link farms', so the police might be able to detect 'mixing farms')
Really for most mid sized transactions cash if far better, and dominos accepts cash unlike say amazon.com.
Not necessarily.
Lots of eWallet providers use "shared wallets" where thousands of peoples' bitcoins are stored in a single wallet. This allows for complete anonymity.
It's simple and free.
What? There seems to be lots of misinformation here. Please prove your point. There is no need to publish your IP when you mine. Most people mine in pools, and I guess the mining pool announces the block. But you can announce it through Tor, or you can solo-mine through tor.
The Bitcoin wiki has a good article on this:
https://en.bitcoin.it/wiki/Anonymity
Whilst it might be possible to obfuscate your transactions list (for all the good that will do you), there's still a paper trail.
No it's not. There's plenty of information that will still leak out, whether it's what service(s) the outgoing money is then sent to, the time of day following transactions take place, and a million other tiny little pieces.
And this is ignoring any issues with the mixing service.
The interesting thing here is that with bitcoin, a cash-like transaction may not be anonymous, but a check-like transaction usually would be.
Of course, the middleman institution could still be compromised here, but since it uses its own protocol to track its customers' balances, it could use one that does preserve anonymity effectively.
Because what you've just described is still just obfuscation.
With this method, incoming and outgoing payments would be asynchronous, so it would be hard to use timestamps to associate them.
Doesn't matter. An outgoing payment will happen at some point in your day, and unless you have zero time patterns in your life, it will help identify you. As will the resulting services and people you send money to, even if the pieces start as small and as basic as "Orders pizza."
The same argument could be made against cash's anonymity.
You can split it into a million micropayments whilst you're at it; it still doesn't stop the information leak.
The same argument could be made against cash's anonymity.
Can you explain this in a bit more detail? I'm not sure I understand.
Yes it does. If I split one payment into three different sizes and send them hours apart while I'm sleeping, from a shared eWallet used daily by 1000 other people, you think that is going to be traceable to me in any way?
Not a chance.
Hey presto, there's some information. Either about liking to buy pizza, having friends in country X, or being based in country X.
Trace it backwards, you have a list of people potentially involved.
I'm not saying that a single transaction will identify you. However, much like that EFF browser identity page, it doesn't take many bits of information - plus a few "likely good with computers" type guesses - to start putting together a list of very plausible identities.
You're kidding yourself if you believe otherwise.
Think about how Google's search engine works. That's a seriously complicated piece of kit, storing vast amounts of data.
Do you really think analysing millions or billions of rows of incredibly database-friendly records is that tricky by comparison?
Well, some problems are so hard (in the rigorous complexity-theoretic sense) that no amount of hardware is going to make a difference. For example, problems currently classed as NP-hard take, in the general case, an amount of time that increases exponentially in the problem size, so past a certain threshold, take too much time even given all the computers on earth.
The problem you'd have to solve here is basically the subset sum problem: given a set of transfers in an out of a mixer (let's say you already know which addresses it uses, which is not easy since it can make new ones for free) which subsets of the transfers out have the same totals as which subsets of transfers coming in? (From that point you identify one in/out set of addresses as belonging to the same person.)
That problem likewise takes exponential time to solve in the general case. And since the mixer chooses the transfers, they can pick it so that it's hard to find solution partitions (i.e. drive it to the part of the problem space where heuristics help the least).
Or they could go the opposite approach and add a random, time varying tolerance (i.e. charge a fee that varies between x and y % over time, or promise that you might get up to x% more or y% less than you put in) that makes the problems extremely underdetermined so that there are arbitrarily many constraint-satisfying solutions thus that the aggregate data is uninformative.
No, "Google solves complex problems" does not prove what you think it does.
I fear that as long as you and I fling accusations like this at one another, no good will come of this thread, so propose we end it thus: I consider the problem solveable; and you do not.
Did you intend to be that self-deprecating? It's pretty nice to see someone being so humble, frankly.
This isn't even the right problem, given the usage model that I posited and to which mootothemax replied; if you keep a balance stored in the mixing account, to which you make deposits on a regular payments, then it's highly unlikely that outgoing payments will match incoming payments in the first place. How often do you currently deposit checks into your bank account in exactly the same amount as outgoing payments that you immediately write after making the deposit?
There'd be no conclusively correlating information here; payments into the mixing account would have different amounts and timestamps from payments going out of it, and in order to use inferences taken from patterns as identifying information - e.g. someone orders a pizza from Mario's Pizzeria every Tuesday at 7 PM - you'd have to already have identifying information about the person you're trying to find in the first place, e.g. that I live near Mario's and happen to enjoy their pizza.
It's not just that the complexity of the problem increases with scale, it's that the reliability of the correlations you can make also decreases with scale.
If I deposit 500 BTC every Friday, and immediately transfer it into the mixing account, then order a pizza for 10 BTC on a Tuesday, paid for from via mixing account, how would you confirm that I was the one who ordered the pizza? All you can determine for certain is that (a) I am a subscriber to the mixing account, and (b) someone who subscribes to the mixing account ordered a pizza. If there are a million subscribers to the mixing account, without access to their internal records, there's no way to conclusively associate outgoing payments with specific subscribers.
This is also money laundering, an illegal activity. If you need to do something illegal to get the bare minimum of functionality out of bitcoin it's not appropriate for business.
If you want to buy pizza anonymously, you have a good way to do so already available to you: pay in cash.
I don't know what America is like. In the UK the Domino's website is very good, very easy to use. Sure you can use BitCoin but I don't understand why someone would want to use BitCoin and pay a premium to do it.
The perfect service for people with bitcoins, who want Pizza, who do not have any cash or any means of converting bitcoins into cash (bank accounts).
I suppose it has a novelty value. Its also a middle finger to anyone you have shown bitcoins to who have said you can't buy anything with them.
At least on the UK version of the website you can pay with cash on arrival. This would remove any credit trial.
Even without a credit trial Dominos would have a record of a pizza being delivered to your address.
If somebody can match your key to your person they can see your entire purchase/sell history.
Which is why keys aren't attached to individuals and can be changed with every transaction.
Yes, some traceability is inherent to blockchain crypto-currencies. But using them anonymously is still easier than with any other electronic payment method.
Now is that before or after Linux dominates on the desktop and Apple goes into bankruptcy ?
What you use to pay for the pizza.
Call me when a pizzeria starts actually taking Bitcoins.
For example, in Canada businesses (at least on Southern Ontario) will generally accept payment in USD instead of CAD, but they tend to have a flat exchange rate (e.g. 1 USD = 1 CAD or 1 USD = 1.10 CAD). If they priced the exchange rate to the current exchange rate as measured by some currency exchange, that would be different.
You run into this same issue when using a US credit card in Canada. The credit card company will exchange (and usually charge an extra ~1% charge). IIRC, they use up-to-date exchange rate info, so technically the price in USD is constantly changing.
I do not know of any credit card that charges the merchant less, when monthly account fees are added in.
Likewise, the Bitcoin Foundation operated its finances in 2012 without a conventional checking account, adjusting the bitcoin salaries of its employees each quarter.
States and groups are looking at how the federal reserve is currently purchasing more than half of all newly issued U.S. Treasury Bonds, and drawing the inevitable conclusion that the the failure of the system is accelerating. The natural end to an inflationary currency is BOOM! There is a desire out there for a deflationary currency. Bitcoin is deflationary, right?
Now I think Bitcoin Sucks is sound economic advice because for every altruistic financial scheme, there have been a hundred scams, but I don't know if Bitcoin has the potential to be useful if we experience hyperinflation.
And yet inflation is as low or lower than it has been in the past 30 years. Not to mention compared to the high inflation of the '70s.
Look at asset prices, they are going up very fast (historically). Or healthcare or higher education, they have been growing faster than CPI for decades with fiat money. You have to look at who has the newly created currency, and where they spend to see the inflation (gov't, high wealth, and upper middle).
The problem with this statement is that 'inflation', as a measurement, has changed greatly over 30 years. To use a technical analogy comparing inflation in the 70s is like comparing "lines of code to implement a function" in a RISC assembly language and python. The only thing that is comparable is that they are both programming languages.
There is a particularly telling comment that came out of the fiscal cliff negotiations, where the Senate asked for a change in the way 'inflation' was computed to avoid a big hit with respect to government programs tied to the CPI. (search for "chained CPI fiscal cliff" for various examples). This very explicit mention of managing the CPI to avoid increases aside, my father who is on a military pension (also indexed to the official government "inflation" rate) has a pretty good history of expenses, and their rise, during his retirement which does not correlate at all with the government rate.
There are some pretty tin foil like sites like www.shadowstats.com but you can also use various search metrics to create a 'bundle' of expenses (housing, food, clothing, gas, taxes, and utilities) and create your own view of what the cost of living has done over the last 20 years. Add in the effects of 'unit deflation' where a 16 oz box of breakfast cereal is now 11.2oz and you realize that the cost of living is going up more than your government is sharing with you, even informally. Their motive is pretty simple, they want to avoid killing the budget with huge increases in indexed aid and indexed treasuries (called inflation protected securities).
But it is interesting that you mentioned the 70's because that is where this started. No one except economists and policy wonks "cared" about inflation until it became an election issue. Then voters started "caring" a lot so the congress has helped "clarify" what it means more and more. Its one of the things I would do if elected to congress (not that I'm running) is I would create a steel wall between economic statistics and legislators. Government manipulation of them does more harm than good unfortunately, but nearly every government manipulates them to some extent.
The current method which is often used to adjust nominal expenditures into current dollars is calculated using a Laspeyres index which, year-over-year, does not account for the fact that when prices change people shift their patterns of consumption.
A Paasche index is somewhat the reverse of this in that it assumes that what you purchased last year was the same as what you purchased this year.
The Fisher index is the geometric mean of the two and if you've had a chance to study some of the methods and difficulties of constructing price indexes, it does offer a plausible compromise between the two, allowing for substition but giving some weight to both indices.
However that it accomodates changes in consumption or "substitution" lets lobbies like the AARP exclaim that it hides the case that retirees have to switch from beef tenderloin to cat food when prices rise.
But in actuality it's both a pretty minor change and the better measure of price changes (if the underlying data can be trusted).
Yes, by selectively looking at one category of good while ignoring other you can create your own special index such that inflation looks like it's high, but that's always true except in a static economy.
As to people worrying too much about inflation, well, I agree in general. But please read the Wikipedia page on inflation to see the reason why politicians might want to care about inflation even if the voters don't.
There are reasons aside from "fiat money sucks". The big ones I encounter seem to be "this is interesting", "this has interest, maybe I can make money in it", and "this can do X".
The GFC was a similar crisis, but the Fed was able to quantitatively ease the US out of it. OK, things were still pretty dire, but given how much debt there was (as a result of the debt bubble which had kept the economy going gangbusters for so long) it wasn't as bad as it could have been.
Austrians (Ron Paul) say things like "that's bad - the Fed shouldn't be able to rescue the economy, because that will force the bankers to act like grown-ups". Unfortunately, it doesn't work that way. The bankers will still take massive risks, and crash the economy every now and then, and the Fed won't be able to help.
Of course, there's reasons to be concerned about the US economy. IIRC, real median wages haven't grown much since the 80s. Basically all the growth has been the rich getting richer. But I don't think that's because of inflation, so much as general policies which favor GPD growth over raising median wages. The US is not a country which cares about the poor, and outsourcing has weakened poor Americans' bargaining power. With the rise of China, that might change (Chinese wages are rising quite quickly, which will make US workers more competitive, which will allow them to demand higher wages). Whatever the case, I don't think it's all the fault of inflationary monetary policy.
And no, I don't blame robots. If robots were taking all the jobs, they wouldn't be going to China. Maybe they will take all the jobs one day, but currently more robots means cheaper products, which means more jobs. Also, before anyone says "the jobs will just go to Africa", they better consider the challenges in building infrastructure there, the fact that Africa is quite diverse (there won't be 200 million peasants all swarming to special economic zones within a decade), and the added demand from all the newly wealthy (or at least, not piss-poor) Chinese.
Source? I'm curious to read about that.
It's controversial though.
Austrians have a similar theory - that malinvestment in the boom (rather than a lack of investment in the bust) is the problem.
And then there's the mainstream neo-classicals, who say it must have been the government because the private sector can't make mistakes.
Moreover, there is a strong argument that deflationary currencies are morally wrong because of their effect on generational wealth inequality. In a society with a deflationary currency, nearly all wealth will be held by older people, simply because they got there first.
You don't even have to look very far to see what a society with deflationary currency would look like. There is a market that has many of the same properties as a deflationary currency, and that's real estate in places like SF and NYC. In Manhattan, there are a ton of older people who purchased real estate in say the UWS in the 1980's and 1990's. Property values have skyrocketed since then, to levels that these people never could have afforded at the time they bought their property. Their kids, now the same age/of the same relative financial standing as they were when they bought the property, are totally priced out of the market.
Sorry for the stupid question, but isn't this morally equivalent to being old and had more time for your direct or indirect investments to grow (pension funds, ...). I mean in the current system old people which weren't stupid/unlucky to throw all the money away usually do have more money than their children (in fact in Italy where I lived, the young generation regularly needs help from parents for buying a house, a car etc).
I believe that you argue that since in a deflationary system "being old" per-se grants you wealth, this is unfair because you didn't earn it, it just happens. However you can still throw all your money in booze and games when you are young, not unlikely the current situation.
But probably I don't get the magnitude of the bitcoin deflation. Wonder what is the predicted deflation in 30 years (assuming an optimistic widespread usage, not the real case)
The fiscal policy is controlled by two numbers which are chosen by 'consensus' among bitcoin users: The reward for mining a block, and the 'difficulty' of mining a block. You can always mine blocks in violation this consensus (eg reward yourself too much), it's just that no one will listen to you, and no one will accept the bitcoins you 'mined'. However, If everyone agreed to change how we choose these numbers, we could change the policy.
I'm pretty sure you could set up a 'bitcoin-2' network which would honor transactions from the original bitcoin network into the new network, yet have different algorithms for reward and difficulty. For now though, it doesn't matter since the current 'fiscal policy' is quite expansionary.
I don't understand why this unreflected bullshit sits at the top of the thread (and I'm not even involved or affiliated with bitcoin).
From the narrow perspective of a BTC-miner, yes, it's relevant, but for subscribers to the lofty goals of a central-bank-independent/anonymous currency it's pointless.
From bitcoincharts.com quickly estimating that the volume in exchanges was 2 million BTC. Bitcoins produced by mining = 3600*30 = 108000 BTC. Unless the speculators are constantly buying from each other, I would say that there are people earning bitcoins in the bitcoin economy, and the amount of those people vastly outnumbers the miners.
But I doubt that they care that much about the pizza service...
I would wager that yes, that does account for quite a large volume of the daily exchange volumes.
The daily transaction volume, with change transactions removed, averages around 400k BTC per day.
So speculator trade is less than 1/4 of all Bitcoin transactions.
Fun fact: SilkRoad is less than 3% of daily Bitcoin transaction volume
75% of trades are commercial in nature. There are thousands of vendors dealing in BTC- hundreds of which deal in it exclusively. Some are even among the most popular web sites in the world.
How much is money-laundering? How much is people just moving stuff around for the hell of it? Of what's left how much is online gambling (an economic activity but not necessarily a 'good' one)?
These things would be very hard to tell I would have thought.
Thanks for outing my startup idea. :-(
Fed #2: Well, 1) we'd need to give the stoners something they love dearly. 2) that thing would need to come attached to their address.
Back in 2011, I learned about bitcoin mining from HN and solved two blocks myself with a CPU miner. Those coins are worth several thousands of USD today. Thank you HN ...
However, I think a ton of people are gambling on bitcoin itself. I've read that many investors say they've tried their hand at bitcoin. It makes sense. The market dynamics can't be much different than forex and are probably a fun experiment. But for serious traders I doubt they could wage big enough bets on BTC without driving up or down prices on themselves.
Additionally, bitcoin transactions have lower transaction fees than credit cards, wire transfers, cash couriers, and so forth.
No wonder that more startups are developing bitcoin applications.
Recent US legislation will make credit card processing fees more visible to consumers, with the consequence that low cost payment processors such as bitcoin will be even more competitive.
"No chargebacks" = "hey, just like with physical cash, someone can just run off with it once you transfer the money". Sure, sometimes that's what you want, but it's not something you have to accept as a result of using that currency type or unit.
If I remember correctly, Visa will let you create a "virtual" credit card so you can shop online without giving out your actual information.
I bet a "bridge" between the Bitcoin and credit card systems could make a lot of money. Does anyone know if this is feasible?
I would bet that this either never comes to market or it ends up being just as inconvenient to use as the existing exchanges.
if( dateTime.Now == friday ) { orderPizza(pizzaType, pizzaSize); }
The problem for miners is paying off their mining equipment from the daily profit before that equipment is obsolete and can no longer make a daily profit given the cost of electricity.
Actually, so long as they have your phone number for delivery issues/to give the driver directions you can track any Domino's order by phone number on their web site (https://order.dominos.com/en/pages/tracker/#/track/order/). Last time I looked they were passing json around or something and it was easy to scrape.
"We set our exchange rate APPROXIMATELY $0.50 Cents less then the current Mt.Gox Rate. The reason for this is that with rapid fluctuation of rates and occasional drops, we do not want to be left holding a worthless bag if the rate drops for some reason. We update prices on a daily basis to reflect this 50Cent rule."
Because it is based on encryption, it can provide both hiding of who you are, and strong proof of who you are. But it is cool that it can also supply you with pizza.
"Because it is based on encryption, it can provide both hiding of who you are, and strong proof of who you are. But it is cool that it can also supply you with pizza."
Seriously made me laugh out loud. You just made my day :)
To expand on that: the main selling points of BTC are that it's easy to transfer and that there is no central bank, which makes it impossible to tap into your funds by increasing the money supply. If your only concern is anonymity, cash is the much superior option (true anonymity vs. mixing).
When you purchase something via bitcoins, it is public information. You have an address that is public that says abcdef bought this. abcdef cant be traced back to anyone unless you publicly announce you are abcdef.
When you buy a pizza, you are saying abcdef lives at this address. So anyone with a subpoena on Dominos records can tie your address to your previous purchases.
Definitely not. Transactions are public, but definitely not the information that connects transactions to identities or merchants.
> When you buy a pizza, you are saying abcdef lives at this address. So anyone with a subpoena on Dominos records can tie your address to your previous purchases.
Also wrong. If you send the transaction from a web wallet, the merchant receiving the coins can hardly say anything about you.
It seems that there are lots of trolls here shouting something about bitcoin which they don't really know much about.
I am saying that a transaction is public, not the details.
I am also saying that dominos will have that transaction tied to the delivery address. This is not intrinsic to bitcoin, its all done on dominos side as part of delivering a pizza.
So let me try again: If abc transfers bitcoins to xyz, and the FBI knows that xyz is a drug dealer, then it sees that abc transfers bitcoins to DOM, then it can subpeona dominos records and find the address of someone who purchased drugs from xyz.
The assumptions I am making: the FBI knows that xyz is a drug dealer. the FBI knows that DOM is dominos.
Are the assumptions wrong? Would the FBI be able to know that?
[Note: You don't actually say that, rather, your attorney argues the above with reference to the rules of evidence and burden of proof; and asserts that receiving a box of drugs in the mail is insufficient proof by itself that you ordered it, and the only other evidence is that a series of jumbled characters paid for it.]
They're going to use it to get a warrant to search your house.
And yeah, this trawler like approach will not catch everybody. But it could score a lot of convictions very quickly.