bitcoin

April 30, 2011 at 7:02 pm | Posted in Uncategorized | Leave a comment

Been experimenting with this bitcoin thing lately. Here: http://www.bitcoin.org/ . Basically, bitcoin is a new peer-to-peer way to exchange money. It’s basically an anonymous paypal. It’s not owned by any one entity. Because the database is distributed, it can’t be taken down, like bittorrent.

There is no “bitcoin” account – only bitcoin addresses. You don’t “know” the person you are giving money to. If you want to pay someone, you assign his bitcoin address to your coin and you sign it with your private key. Then you submit the new document to the distributed database. The recipient checks the database if everything’s ok and if it does, he “owns” the coin. Money can be exchanged back to dollars using bitcoin exchanges.

Digital currencies are often used by drug dealers and hackers to transfer money, it’s completely anonymous. People are using it to avoid paying taxes too, although I obviously don’t advocate this. The
scary thing is is that mainstream people are starting to use this thing now. Electronic Frontier Foundation and the Singularity Institute are two examples. Other vendors are here: https://en.bitcoin.it/wiki/Trade . ha ha, you can flat out by heroin using bitcoin. there’s no regulation, it’s basically the wild west.

The government will obviously try to shut this thing down, once it gets out of the underground, but I doubt they can do it. It’s like trying to shut off the internet or bittorrent or something – you’d have to kill every node.

Ok, here are some downfalls:
– the security of the system seems to be pretty good, but the system is subject to theoretical attacks such as cancerous nodes or collusion. Theoretically, if a botnet gets more than 50% of the nodes, some trickery can happen.
– if you give money to someone and he fucks you in some way, tough shit, it’s gone. There is no such thing is chargebacks with bitcoin. Once it’s gone, it’s gone. This is actually a feature built into the system.
– Your private keys can easily be stolen if your computer is insecure. considering the number of people who are 0wned through trojans and botnets these days, this is a significant risk factor. You can basically lose your bank account in an evening. Much worse than credit cards in this regard.

The repurcussions of this technology is huge, this can be a game-changing platform.

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