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Identit HT
25 May 2

Does Satoshi’s Identity Matter?

satoshi identity

We all love a good mystery.

There is something to be said for not knowing such a key aspect of a subject for which you otherwise retain a passionate foundation of knowledge.  Whether you’re a distinguished cryptographer, or a small business owner who has just begun to use this strange new currency, we each share a level playing field when considering just how little we know about the person or group who started everything; the cipher known only as Satoshi Nakamoto.
Every few months, some new article rehashes the question of Bitcoins cultural identity crisis. The most recent of these is a New York Times article, written by Nathaniel Popper, which you can read HERE. If you enjoy reflecting on Bitcoins mysterious origins, I would not dissuade you from reading it. Before you give yourself over to the call of Bitcoin’s greatest enigma however, lets take a moment to examine why the identity of its founder is inconsequential to its continued success and acceptance.

SATOSHI DID NOT WORK ON BITCOIN AS WE KNOW IT

In the 5 years since he last contributed to the Bitcoin project, Core Developers have rewritten the Bitcoin Source code so extensively, that almost nothing remains of Satoshi’s original work. Bitcoin has now been growing longer without Satoshi than with him. While he was surely a visionary, Mr. Nakamoto was not necessarily a master engineer.  He relied closely on the company of people who were active within an already existing group of hobbyists and practitioners. It is many of these same people, such as Wladimir J. van der Laan, and Gavin Andresen, who have worked on Bitcoin’s Core Development from it’s earliest days. Dear losses have been suffered, with respect to the late Hal Finney, but Bitcoin’s developmental continuity remains nearly the same now as it was at its advent in 2009.

THE IDEA FOR DIGITAL CURRENCY HAS BEEN AROUND FOR DECADES

Be mindful, when romanticizing the world of innovation, is that it rarely matters who thought of an idea first. Credit goes to the person who builds and creates; who acts on their profound intentions, bringing them forth into reality. Satoshi Nakamoto deserves credit for giving digital currency it’s substantive form, but not necessarily as its progenitor. He built heavily on the shoulders of giants, and his respect for those who came before him may be partially responsible for his decision to remain anonymous. Eight separate sources are referenced at the conclusion of the Bitcoin white paper. Most important among this list are Wei Dei and Adam Back, both forbearers to the concepts of a cryptographically secured currency ledger and the proof-of-work algorithm, respectively. Correspondence between Satoshi and several of the people who’s ideas are referenced in the paper are publicly available online. Satoshi treats each of them with reverence, as should anyone benefitting from modern blockchain technology.

IT IS BETTER THAT WE DON’T KNOW

Bitcoin’s popularity has soared with an unprecedented rapidity since 2009. This is due in part to the laser-like focus on the actual breakthrough of digital currency, rather than on its creators.  When the world talks about Tesla, or Apple, attention is duly paid to their beguiling leadership and business practices. When the world talks about Bitcoin however, it talks about the technology. There are no distractions from charismatic faces, humbly shrugging aside their praise and deflecting admonition. It is impossible to shy away from a broad technological discussion when debating the merits of Bitcoin, which has led to intense passion from those in the know, and a fervent education for the people within their circles. Bitcoin is succeeding because of its community. There is no company, there is no face. There is only technology and people. In this respect, anonymity may have been Satoshi’s greatest gift to the world.
Riddles are great fun. They give us something to talk about when there is nothing else to say. They supply the news media with an excuse to write about us every couple of months, and reignite the worlds still-cautious fascination with our intriguing little society. Satoshi Nakamoto is Bitcoins own personal D.B. Cooper. He is often what people gravitate towards first in conversation, once they find out that you are a part of this world; a real life conspiracy theory, ripe for speculation. It’s exciting, and thrilling, and scary to some. Most importantly though, it’s a sublime tool by which we can embolden fresh minds to deeper conversation and understanding about this revolutionary technology that will continue to change the world for decades to come. For that, we say Thank you, Satoshi. Thank you for the sacrifice of your anonymity. Where ever you are now, be happy.

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
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Articles, bitcoin, cryptocurrency, Nathaniel Popper, new york times, Satoshi Nakamoto
mastercoin logo
3 Dec 0

HolyTransaction opens it’s doors to the world of crypto 2.0 with new Mastercoin WebWallet

November 24, 2014 – SANTA MONICA – HolyTransaction announced today that they have extended support on their platform to the Mastercoin Protocol and all of Mastercoin’s Smart Properties which allow their users to host digital tokens recorded on the blockchain.
Since the introduction of Bitcoin in 2009, Decentralized Applications have been creating waves in almost all sectors of the world, especially in finance. HolyTransaction is positioning itself to support any and all developments in this space.
Mastercoin uses the Bitcoin Blockchain to store records/data. It has highly useful feature which allows a party to create their own digital tokens, thereby creating smart properties that can enable online exchange of assets (i.e. stocks, bonds, real estate and various finance and security features) with the security and cost-savings of Bitcoin protocol.
“We believe that digital asset transfer protocols will replace outdated bureaucratic rituals in the near future and are extremely happy to push towards this direction,“ said Andrey Zamovskiy.
HolyTransaction is a transparent, accessible universal cryptocurrency wallet that allows users to store multiple digital assets in one location. HolyTransaction comes with a one-of-a-kind currency exchange feature that allows users to easily convert one asset to another. Francesco Simonetti, co-founder of HolyTransaction, says: “The Mastercoin Protocol can be used for things such as decentralized crowdfunding, asset management, and user currencies all by creating tokens built on top of the Bitcoin Blockchain”.
About HolyTransaction:

 

Typically if you want to hold 10 different cryptocurrencies (Bitcoin, Litecoin, Dogecoin, Peercoin, etc.) you need to have 10 different wallets, which makes cryptocurrency security hard to manage. HolyTransaction, your personal multi cryptocurrency wallet, solves this problem, plus it comes with currency exchange features so that you can easily convert one cryptocurrency to another.

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
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Articles, bitcoin network, crypto currency wallet, cryptocurrency, cryptoeconomics, mastercoin, smart contract, update
Coles 630x250
28 Jul 0

Why Timothy Coles is selling his $2 Million Gold Mine for Bitcoin

 

Timothy Coles is the man behind the profitable gold mine in the Yukon
city of Dawson currently for sale for just over 3,200 BTC on luxury
marketplace BitPremier.

 

With more than 30 years of experience in the gold mining industry,
Coles brings a unique perspective to digital currency and the concepts
that underly the technology. He sees bitcoin as a one-of-a-kind type of
asset.

 

Coles told CoinDesk that he first learned about bitcoin while
wintering in the Philippines. Casual research grew into more active
investigation, leading to discussions about how bitcoin might fit into
plans to sell off his gold interests in the Yukon.

 

With the mine now for sale on the luxury exchange, Coles is optimistic about bitcoin’s prospects, saying:

 

“I believe bitcoin has nowhere to go but up. In the long run, it’s just going to get stronger and stronger and stronger.”

 

He added that although he currently owns no bitcoin, he sees a future
in it should the BitPremier sale succeed. While he has no active plans
to invest were he to enter the market, Coles expressed an openness to
invest in the broader bitcoin industry, including the mining sector.

 

The mine is currently on sale for $2m and reportedly generates $1m in annual revenue.

 

Bitcoin vs gold

 

When discussing the similarities and differences between gold and
bitcoin, Coles cited the fact that the prices in digital currency
markets are set by supply and demand.

 

By comparison, gold is subject to geopolitical pressures that have,
in his eyes, made it a less attractive option over the years:

 

“The people that have the bitcoin are the ones that can
drive the price up, or drive it down, depending on what ups. Whereas
gold, the people that have the gold are really at the mercy of
politicians, financial institutions, London fixes that we really know
nothing about. People that have gold really have no control over the
direction that goes.”

 

He went on to suggest that these influences could one day take a toll
on bitcoin. However, he said that the decentralized nature of digital
currency technology makes it “less susceptible to manipulation compared
to gold”.

 

Coles added that the price of bitcoin
went too high too quickly, resulting in an equally swift correction. In
the months since – which has seen a raft of both positive and negative
news for bitcoin – the price, he said, has risen on the merits of its
strength rather than pure hype or speculation.

 

Bitcoin needs education

 

One of the key problem areas of bitcoin, Coles said, is a lack of
education among the broader public. This is due to the novel
characteristics of bitcoin that make it not quite a currency, commodity
or property. Instead, it lies somewhere in the middle.

 

As a result, Coles reckoned, bitcoin’s success – and its price –
hinges on whether or not more people learn about how it works, how they
can acquire it and, most importantly, how they can use it.

 

He explained:

 

“I believe that bitcoin needs some advertising the world
over to learn more about what it’s all about. Nine out of 10 people I
talk to have heard of bitcoin, but they don’t know about it, they don’t
understand and they don’t want to because it’s out of their realm of
understanding.”

 

Pointing back to the topic of political impact on bitcoin, having an
environment in which more people understand how to use digital currency –
and do so – could enable the bitcoin market to operate without
manipulative influence from the outside.

 

More gold plans ahead

 

While citing problems in the global gold market, Coles said that
after the sale of his mining interest in the Yukon he’d stay on the
lookout for new opportunities. Issues aside, he said that he makes a
“good living” in the gold market, joking that the industry was “spoiled”
in 2012 and 2013, when gold prices surged above $1,700 an ounce.

 

He explained:

 

“I would still always keep my eyes open for opportunities in gold mining. It’s something that’s in your blood.”

 

As outlined in the BitPremier advertisement, Coles is offering to
help provide logistical and managerial support to a potential owner. The
sale actually has two components: Canyon Creek, a developed, three-mile
property with drilling and exploration already conducted on the plot,
and an existing lease in the Bonanza Creek region.

 

Coles explained the real prize in the sale are his interests on Bonanza Creek,
a waterway in the Yukon made famous for the abundance of gold
discovered in the region. He suggested they are the heart of something
that offers “big potential” to interested investors.

 

 

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
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Articles, bitcoin, cryptocurrency
26 Jul 0

Bitcoin has passed the tipping point

Products and services that are first-to-market often take such a battering that they lose out to competitors with copycat products. Business history is littered with wildly successful products with ultimately spectacular collapses because they lost out to competitors that found a better way of doing things – things they learned at the trailblazer’s expense.

The Sony Betamax is the poster child for products that created a market and lost out to a rival – in this case VHS. Sony created a market for recording TV, but because the tapes where an hour long VHS grabbed the movie rental market.

More recently, Friendster was the first social network to explode, with millions of users in the first 3 months. But it couldn’t manage its growth and lost out to MySpace and of course Facebook.

adoption curve

There are many more examples. Some lost slowly, like the Atari 2600 game console, and some crashed spectacularly like Rio MP3 player. Palm lost to Apple, Netscape to Internet Explorer, WebCrawler to Google, Tivo to the cable companies, and on and on.

So far Bitcoin is an exception to this model. And though it’s been battered by ruinous headlines, including one just this week where the World Bank is calling it a naturally occurring Ponzi scheme, Bitcoin remains resilient.

Kaushik Basu, World Bank economist and author of ‘Ponzis: The Science and Mystique of a Class of Financial Frauds’ argues that most Ponzis today are not always obvious and that today’s Ponzi schemes often don’t have a puppet-master pulling the strings. Bitcoin, he says, is just such a Ponzi. The speculation on the currency raises the demand for Bitcoin making it a bubble.

Bitcoin has hundreds of competitors all built on the Bitcoin model. A handful are gaining some success, like Litecoin which is currently trading at $9, and Darkcoin (I’m not kidding) which is trading now trading at $7.50.

Darkcoin was built to cover perceived flaws in Bitcoin’s anonymity. One reason for the early success of Bitcoin was that it was as anonymous as passing dollars on the street. And while there is a far greater level of anonymity with this electronic transaction than making a purchase with a credit card or PayPal, Bitcoin is not anonymous to those forces who really want to know.

Unlike Bitcoin, Dash mixes up users’ transactions so that it’s nearly impossible to trace a payment to a person. But the promise of Dash’s privacy features solves a problem for only a small subset of Bitcoin users.

Few have heard of other crypto-currencies. If people barely understand Bitcoin, then any competitor has the impossible task of differentiating itself.

In his paper Basu mentioned Bitcoin by name, so did the IRS when it said it was a taxable asset. And this week Benjamin M. Lawsky, the superintendent of financial services for the State of New York, proposed regulations to create a “BitLicense” to include rules on consumer protection, the prevention of money laundering and cybersecurity. That’s akin to Apple successfully rebranding the MP3 to a podcast.

Just search “20 USD in BTC” on Google and you’ll get the exchange rate. It works for any fiat currency. You can’t do that with any other crypto-currency.

Bitcoin is currently trading at $600. Not bad for a five year old Ponzi scheme.

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
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adoption, Articles, bitcoin, bitcoin network, cryptocurrency, cryptoeconomics
blockchain 1
24 Jul 0

Think the Internet’s disruptive? Hold tight for blockchain!

Wonder what all the fuss is about Bitcoin? A growing number of technology watchers are becoming increasingly excited about the peer-to-peer system on which the digital currency is built.
(Diginomica) The blockchain, this is the distributed, encrypted record that Bitcoin uses to record every transaction. An article in the Telegraph last week by Matthew Sparkes explained how the blockchain works:
The idea is that each and every transaction is broadcast by the person initiating it. Rather than telling the bank we want to spend [$5], we tell the world. That transaction is bundled up with thousands of others and cryptographically bound into a ‘block’ by ‘miners’ …
To quote the wiki dictionary maintained by ‘the Bitcoin community’ — perhaps the nearest you can get to an official explanation — ‘mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady … The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus.’

This matters because, as Sparkes sets out under his provocative headline of The coming digital anarchy,
this is a system that can be applied not just to money but to any kind of transaction, from domain name registration to legal arbitration or public elections. In between those two extremes, it could completely overturn the way enterprises organize themselves and tout for business.

The fifth protocol
To better understand the impact on business, it’s worth going back to a longform blog post from April by Angellist CEO and co-founder Naval Ravikant, in which he states that cryptocurrencies will create a fifth protocol layer powering the next generation of the Internet:
The Four Layers of the Internet Protocol Suite are constantly communicating. The Link Layer puts packets on a wire. The Internet Layer routes them across networks. The Transport Layer persists communication across a given conversation. And the Application Layer delivers entire documents and applications.
This chatty, anonymous network treats resources as ‘too cheap to meter.’ It’s a giant grid that transfers data but doesn’t transfer value. DDoS attacks, email spam, and flooded VPNs result. Names and identities are controlled by overlords — ICANN, DNS Servers, Facebook, Twitter, and Certificate ‘Authorities’.
Where’s the protocol layer for exchanging value, not just data?
Where’s the distributed, anonymous, permission-less system for chatty machines to allocate their scarce resources? Where is the ‘virtual money’ to create this ‘virtual economy?’ …
Cryptocurrencies are an emergent property of the Internet — almost a fifth protocol in the Internet suite. If [Bitcoin creator] Satoshi Nakomoto did not exist, it would still be necessary to invent them.
Someday, they will be used by the machines in our network, on our desk, in our garage, and in our pocket to exchange value and achieve consensus at blinding speeds, anonymously, and at minimal cost.

What Ravikant is really describing here is not Bitcoin per se but the work of the blockchain, providing a trusted, shared transaction record that allows machines to own and exchange value without human intervention. Although in strict engineering terms it’s not really a protocol, its impact is potentially as huge as any of these other building blocks of the Internet.

Effectively, Ravikant is arguing the blockchain is how the Internet of Things will exchange value — not just monetary value, but also many of those other components of business transactions that we currently find much harder to quantify, such as trust and reputation.

blockchain blocksAutonomous things

Now back to Sparkes, who recounts a scenario imagined by Mike Hearn, an ex-Googler who now works on Bitcoin:

Jen wants a taxi. She tells her smartphone where she’s heading and it immediately starts gathering bids from nearby taxis and ranking them based on price and user reviews. This system on which requests and offers bounce around is called TradeNet, and it would be based on blockchain technology.
The strange thing about these vehicles is not that nobody drives them, as self-driving cars will have become commonplace decades before, but that nobody even owns them. They are what Hearn calls ‘autonomous agents’, independent machines which earn their own money through fares, pays for their own fuel and repair and operates utterly without outside control.

Far-fetched it may be, but this is the kind of scenario that is getting venture investors excited about blockchain right now — and you can understand why.

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
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Articles, blockchain, cryptocurrency, future
23 Jul 0

Bitcoin like the Internet In 1995

At only five years old, bitcoin
is receiving more venture capital investment than early stage Internet
companies were in 1995. Remember what the Internet was like in 1995?
If you have 27 minutes to refresh your memory, YouTube has a Computer Chronicle video showing what the 1995 Internet
looked like. If not, the piece discusses how hard it was to stream
video, how there was no safe way to process credit cards, how ugly the
websites looked and how slow the Internet was.
Things seemed so grim. In 1995 Newsweek ran a piece: “Why the Internet will Fail.”
Sound familiar? These are the same arguments against bitcoin: hardly
anyone uses it, it isn’t safe, and it is hard to use. However digital
currencies are so much cheaper, more convenient and more powerful than
their analog counterparts that, like the Internet, their widespread
adoption seems assured.
Which digital currency will triumph? Hundreds or even thousands of
competing digital currencies have entered the market. So far none has a
clear shot at overtaking bitcoin. Bitcoin’s network effect is growing at
a fast rate, making its dominance even more likely.

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
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Articles, bitcoin, cryptocurrency, future
22 Jul 0

A little altcoin sanity: Peercoin

(CoinReport) Litecoin, Namecoin, and Peercoin are the three you consistently would hear referred to when people talked about alts. It probably helped that BTC-e, one of the early altcoin hubs, added them all, giving them greatly increased prominence in the community. In looking at these four cryptocurrencies — Bitcoin, Namecoin, Litecoin, and Peercoin — it’s interesting to consider them in terms of how they differ from the original. Namecoin is the least distinct from Bitcoin: The only real distinction is the additional name-capturing feature. Litecoin is distinct in a few ways: block timing, total coins, and hashing algorithm (Scrypt). Still, neither of these were really all THAT different.
Peercoin actually IS different on a fundamental level. It introduced a concept now relatively commonplace within altcoins: Proof-of-Stake. Before we go anywhere, though, specs:
– Developed by Sunny King and Scott Nadal
– Announced well in advance of release on August 12th, 2012
– Mixed proof-of-work and proof-of-stake network security
– No maximum coins, eventually maintains 1% inflation through Proof-of-Stake
– 10-minute confirmations, like Bitcoin
So what exactly IS Proof-of-Stake (from here on out, PoS, no giggling please)? It’s the use of coins held in wallets to secure the blockchain. On a very basic level (and apologies in advance for an analogy which distorts the situation, I only have so much space), pretend you’re trying to account for all the gold in the world. You have a list of everyone who had some gold last time you checked. You ask all of those people “Hey, how much gold do you have?” and they all send you proof of exactly how much they have. So you can cross those people off your list — you only need to go find the as-yet-unknown gold owners. Much less work. As a reward to those gold owners (Peercoin-owners) they get a tiny bit more Peercoin, distributed based on how many Peercoins they own. This is essentially the basics of PoS: Instead of using electrical power to compute hashes to continuous prove ownership of coins and ensure network security, the PoS model just looks backwards in time to check and make sure proper ownership was verified, and that the coins have remained in that person’s wallet since that last check. If both of those are the case, no more work is needed to be done.
So why would anyone want to use a PoS system? More directly, what are the advantages?
First, it incentivizes owners of coins to own them. Generating 1% interest per year is a neat little benefit — not so much that it is a major problem for currency stability, or that it benefits holding coins so much that it promotes severe deflation, but just a little bit.
Second, it ends the possibility of some of the exploits the Bitcoin network needs to fear, such as the 51% attack. A 51% attack is essentially nonsensical when considered in terms of PoS, where an attacker would need to own 51% of the coins in order to perform it. I don’t even want to consider what the market capitalization of Peercoin would have to reach for one entity to buy up half of the coins, but suffice it to say that it would be the most expensive act of cutting off one’s nose to spite one’s face any of us had ever bore witness to.
Finally, since PoS replaces a significant portion of the role played by PoWork for securing the Peercoin blockchain, it is far more energy-efficient. No need to be running a huge amount of hashpower — those rooms full of Bitcoin mining ASICs don’t have a place in Peercoin. This is relevant for exactly the reason you would think: If you can achieve the same result (secure blockchain) with less expended resources (less energy), why wouldn’t you? Or, to quote from the end of the Peercoin White Paper: “…we expect proof-of-stake designs to become a potentially more competitive form of peer-to-peer crypto-currency to proof-of-work designs due to the elimination of dependency on energy consumption, thereby achieving lower inflation/lower transaction fees at comparable network security levels.”
Anytime resources must be expended in pursuit of a goal, the end-user must pay for those resources. The end-user of a cryptocurrency is its owners; why pay miners unless you have to? As Bitcoin did to banks and the fiat money system, so can Peercoin do to Bitcoin, at least in theory.
But there’s still one very unanswered question: How do we value Peercoin?
Unfortunately, for once, I’m going to have to tell you all something a little embarrassing: I have no idea. I understand what value it adds to the world (a blockchain which is cheaper to run than a purely PoWork model), but it’s hard to say how that added value can be understood in terms of market capitalisation. Essentially, though, there are two potential options:
1. Bitcoin and Peercoin coexist. Bitcoin is used as the “reserve currency” of the cryptocurrency world; the asset in relation to which all others are considered. Bitcoin is not commonly used for simple transactions due to high costs of exchange. Peercoin portefeuille, being cheaper to use thanks to PoS, is used instead.
2. Bitcoin’s first mover advantage is somehow lost (or a black swan takes flight), and cheaper methods of curating the blockchain, such as PoS, take over. Peercoin takes on the role of reserve currency thanks to its competitive advantage over PoW, and due to its first-mover advantage relative to other PoS systems.
And, of course, option three: Peercoin loses and becomes an unremarkable footnote to history. It is worth noting that option three is the path most altcoins are very likely to follow. I simply don’t often discuss it, because the role of an investor is to look for potential value; if you spend all your time pointing at things you expect will fail, you’re just wasting time.

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
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Articles, cryptocurrency, peercoin
shutterstock 113057557 630x402
20 Jul 0

Under the microscope: conclusions on the costs of Bitcoin

Hass McCook is a chartered engineer and freshly minted Oxford MBA. He has been researching bitcoin over the past several months and recently joined the Lifeboat Foundation’s New Money Systems advisory board.
This, the final instalment in his five-part series, evaluates the relative sustainability of the bitcoin network against the costs of gold production, the printing and minting of physical currency and the legacy banking system.
Under the Microscope has aimed to cast a critical eye over the social, environmental and economic impacts of the way we currently transact and transfer wealth, be it through legacy systems like gold and fiat currencies, or through newer digital cryptographic ones.
The series has also endeavoured to give readers a clearer idea of the human and environmental impacts associated with both current and future monetary systems, and allow them to draw their own conclusions on the relative sustainability of the old and new systems when viewed from a holistic “triple-bottom-line” approach.
Although it is not necessarily fair to compare bitcoin to the entire legacy banking system, there was doubt in the community about the impact of the legacy banking system, and thus, it has been quantified for completeness.
It should be noted that the only thing involved in bitcoin mining is electricity use, and as the world moves towards clean and renewable energy, Bitcoin will have even less of an impact on the environment (See Koomey’s and Moore’s Laws). There is also much larger scope for energy efficiency improvements in integrated circuits and computing than there are in gold recycling.
As can be conclusively seen, the relative impact of the bitcoin network does not even register on the radar of the fiat and gold-based monetary systems, representing a very conservative relative environmental impact of just over 0.13%, and a relative economic impact of just under 0.04%. When one considers Koomey’s Law, we can expect energy/GH to continue to half every 18 months until 2048.
This means that we can expect our current industry best efficiency of 0.733 W/GH to reach 0.0000000873804 W/GH. Thus – armchair academics take note – in the event that bitcoin scales to a million times its current size and market cap over the next 30 years, it’s environmental impact will still be insignificant compared to existing systems.
When considering Moore’s Law, we can expect $/GH to continue to half every 18 months until at least 2020. When we consider the advent of decentralised emission-free renewable energy, we can expect tCO2/GH, and possibly even $/kWh, to tend towards zero.
The more agile and dynamic bitcoin companies can take advantage of these trends, but the sluggish, inert and over-encumbered incumbents simply cannot. As time goes on, bitcoin only becomes more sustainable, while legacy systems continue to bloat year-on-year.
There are no negative social externalities as a result of bitcoin proliferation, and any money laundering and shadow economy dealings that currently happen on the network will reduce drastically in proportion as adoption grows and regulations firm up on the on-and-off ramps into the bitcoin economy.
Rome wasn’t built in a day, and the crypto-currency space will take time to evolve to ensure that the issues faced and created by our legacy monetary systems do not continue to plague us for the next century and beyond.
It has been demonstrated that institutional fraud is a problem systemic to humans, and not to monetary systems. However, transactional fraud is only a problem in legacy systems due to the infallibility of the fact that 2 + 2 will always equal 4.
Although this paper has shied away from all of the ideological and philosophical debates surrounding bitcoin, what is clear is that the argument that bitcoin is superior monetary system – from the benefits and protections it provides to merchants and consumers, to the relative lack of negative impact it has on our planet and humanity in general – is a strong one.
The world is currently crippled by several issues, and the human race faces several existential threats such as climate change, the global ageing population demographic crisis and wealth and income inequality.
It is also unacceptable in 2014 to still have tens of millions of people forced into labour, and current monetary systems are somewhat responsible for several of the social ills brought about by corruption, money laundering and the black market.
For those who are willing to back their principles and morals with their money, bitcoin provides the opportunity for socially, environmentally and economically conscious global citizens to choose to no longer participate in the fragile and rotten legacy monetary system, and voluntarily participate in the open and wondrous bitcoin ecosystem.
Due to the several benefits and significantly reduced burden on our planet and society, there is a certain feeling of inevitability about digital currencies, whether it be bitcoin, or a future currency that proves to be even more sustainable and beneficial for humanity.
You can read Hass McCook’s paper ‘An Order-of-Magnitude Estimate of the Relative Sustainability of the Bitcoin Network‘ (on which this series is based) in full here.

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
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Articles, bitcoin, cryptocurrency, mining
15 Jul 0

The line between fiat and cryptocurrency is getting fuzzier.

(BitcoinMagazine) The line between fiat and cryptocurrency is getting fuzzier. With the advent of Bitcoin 2.0 technology, we can now use cryptocurrency to exchange stocks, property, commodities, and even state-backed money. But if the whole point of cryptocurrency was to decentralize the financial system, what’s the point of a dollar-backed coin?

Dollar-backed digital coins have been attempted many times before. The Canadian government even tried to get in on the action, and unsurprisingly failed. Some claim that the first cryptocurrency to attempt this was Coinaaa, but this is technically incorrect. Coinaaa sells premined coins, and does invest a lot of the revenue in Norwegian krone, but their intention is to maintain a stable value independent of any state-backed currency. The company invests their earnings, and uses some of the money to buy back coins when the price drops, or sell coins when it rises.

The company promises 0% transaction fees, but at the cost of a centralized mining system. While this fails to represent actual kroner one could trade in a decentralized manner, it does serve as a great transactional currency. This is theoretically possible without having to rely on humans–decentralized autonomous software could do this by adjusting block rewards or destroying transaction fees in response to price fluctuations–but if they make the right investments, it functions for now.

Given the possible and existing options available, one might then wonder why Brock Pierce chose to introduce Realcoin, the first cryptocurrency backed by US dollars. Although they claim to hold US dollars in “conservative investments,” this probably means they’re doing the same thing Coinaaa is with your money. The major difference is that they aren’t trying to maintain a stable value: Realcoin claims they will maintain a fully-auditable 1-to-1 reserve of US dollars, which can be redeemed for their coins. This is all enabled by the Mastercoin protocol (Omni Layer) on the existing Bitcoin blockchain.

This will cause Realcoin to fluctuate with the value of the dollar, for better or for worse. It will inflate with time, as all fiat money does, meaning you won’t want to keep your savings in it–Bitcoin would be a better choice. A good transactional currency should be neither inflationary nor deflationary, so Coinaaa is clearly the superior choice for daily use; both will likely make their profit by trading and investing with your money, and require very similar amounts of trust.

Why, then, create Realcoin? Although the Coinaaa company will definitely hold some kroner, a Coinaaa will not represent the value of a Norwegian krone. This means that if you want to do FOREX trading involving Norwegian currency, you have no choice but to return to centralized exchanges. Even if you don’t want to hold or use kroner, there’s profit to be had in exchanging it.

Realcoin, therefore, represents an opportunity to speculate with fiat currency for the first time. If you have reason to believe its price will move for or against a digital currency on the market, now you can take advantage of that. Given that the Mastercoin protocol will almost certainly contain a decentralized exchange, Realcoin allows you to trade in US dollars without ever touching a traditional financial institution. The state is just like any other company, issuing money that you can choose to use–or not.

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
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Articles, cryptocurrency, cryptoeconomics, future
Bitcoin Trends 630x392
13 Jul 0

How the Bitcoin landscape is evolving in 2014

The bitcoin landscape is evolving so rapidly that it’s hard to believe we’re already halfway through the year.

(CoinDesk) Like any new industry, there are so many areas to explore in the bitcoin space that sometimes make a week’s worth of developmentsit feel like a month or two have gone by.

Bitcoin has certainly seen a lot of action in 2014. The collapse of Mt. Gox, hefty venture capital investments in bitcoin startups and the US government auction of 30,000 bitcoins seized from the Silk Road all generated buzz in the mainstream media.
CoinDesk’s recent State of Bitcoin Q2 2014 report highlights some of the key developments that have influenced bitcoin’s journey over the past few months, providing context for the digital currency’s ever-changing position in society.
While only time will tell what’s in store for bitcoin’s future, a number of trends have emerged in the industry this year that could shape the direction and velocity of bitcoin’s growth.
Here are five bitcoin trends that have emerged in the first half of 2014:

1. Big-name retailers jumping on board

The year started with a bang when Overstock became the first major retailer to accept bitcoin. News of Overstock’s success with the digital currency served as a signal for other large companies to follow suit.
Electronics retailer TigerDirect integrated bitcoin as a payment option by the end of January, and other household names like the Sacremento Kings, Lord & Taylor and REEDS Jewelers got on board soon after.
By the end of June, three companies with at least $2b in annual revenue had begun accepting bitcoin: DISH, Expedia and Newegg.
With smaller businesses also continuing to accept bitcoin at a fervent pace, we estimate that around 100,000 merchants will accept bitcoin by the end of 2014:

State of Bitcoin Q2 2014

2. A warming regulatory climate

While it certainly hasn’t been all smooth sailing between governments and bitcoin this year, it seems like tides are changing and regulators around the world are starting to take a more open-minded approach to the digital currency.
In the beginning of 2014, China’s stance on bitcoin was ambiguous at best. By April, China’s Central Bank Governor said that banning bitcoin was “out of the question,” referring to it as more of an asset than a currency.
Russia, after releasing stern warnings about bitcoin early this year, recently reconsidered its stance on the digital currency.
Gerogy Luntovsky, the deputy chairman of Bank of Russia, explained that his agency is going to take time to examine bitcoin as the industry continues to evolve:
“At this stage, we need to watch how the situation develops with these kinds of currencies. These instruments should not be rejected.”
Progress has also been made in places like California, where Governor Jerry Brown has granted bitcoin ‘legal money’ status, and Switzerland, where similar ‘legal money’ regulations are being considered.
Regulators seem increasingly willing to hold off on impulsive legislation in favor of working with the bitcoin community to find the best resolutions to prevent money laundering and fraud without stifling innovation.

3. VC firms keep betting big

Not everybody is as slow as governments to embrace bitcoin.
Serious venture capital investments in bitcoin companies were already taking place in 2013, but VCs have certainly kicked it up this year, with a total of $150m having already been invested in 2014.
With 2014′s Q2 VC investments reaching $73m (up from $57m in Q1), CoinDesk estimates that by the year’s end, 2014 VC investments in bitcoin companies will have surpassed 1995 VC investments in Internet companies:
Bitcoin VC Investment Compared to the Early Internet

State of Bitcoin Q2 2014

The venture capital flowing into the bitcoin space supports the industry’s infrastructure both explicitly and implicitly: startups gain access to resources that allow them to build much-needed products and services around the Bitcoin protocol, and the investors’ confidence in the digital currency brings legitimacy to bitcoin’s reputation.

4. Building on the block chain

Most people who take the time to really learn about bitcoin realize that the true genius in Satoshi Nakamoto’s invention is not the coins themselves, but rather the block chain.
The term ‘Bitcoin 2.0′ is often used to describe applications that use the technology of the block chain to address issues like smart contracts and identity verification that were once impossible to solve in a decentralized way on the Internet.
Jeff Garzik, one of the bitcoin protocol’s core developers, described the significance of the block chain beyond the scope of digital currencies:
“As a computer scientist, and in computer science in general, when you talked about building distributed systems, there tended to be a purely theoretical view about how computers would talk to each other, how to keep them coordinated. Satoshi and the blockchain really solved that problem in an elegant and unexpected way.”
Block chain-focused startups like BlockScore and BlockCypher have already secured funding this year from investors. As 2014 rolls on, expect to see new uses of the block chain technology solving problems in a uniquely decentralized manner.

5. New emphasis on transparency

The collapse of Mt. Gox, once the biggest bitcoin exchange in the market, was a wake-up call to many in the community.
The former exchange’s CEO Mark Karpeles was notoriously opaque in the months leading to its bankruptcy, causing confusion among users who held bitcoins on Gox.
Ultimately many people lost BTC through the course of Mt. Gox’s downfall. Outcries from the community started pouring in, demanding other big exchanges prove their solvency with professional audits.
Exchanges like Bitstamp, Kraken and Coinbase all agreed to be audited in the aftermath of Mt. Gox’s liquidation.
The demand for more transparency in the industry doesn’t stop at exchange audits, though. Revered bitcoin evangelist Andreas Antonopoulos recently took to Twitter to announce his departure from the Bitcoin Foundation, citing a lack of transparency as a primary concern:
If the first half of 2014 proves anything, it’s that the technology underlying bitcoin is resilient even under catastrophic circumstances (Mt. Gox), and that the community is willing to rally together in bringing bitcoin to mass adoption.
There’s a reason people call it the “honey badger of money.”

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
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Articles, bitcoin, bitcoin adoption, bitcoin network, cryptocurrency
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