Posts Tagged ‘Bitcoin’

 

Predictions

Sunday, December 30th, 2012

I suppose I ought to make some predictions for the upcoming year. It’s not an election year, so I suppose the predictions won’t be about any election results (well, regular election results). But we can have some fun nevertheless. Feel free to play along at home or in the comments:

Q: What new products will Apple release?
A: Since I have already stated that they will do a watch and it has since appeared in print that they are in fact working on one, I’ll stick with that. I’ll also stick with my earlier prediction of an iPhone nano. Regarding a TV I’ll say this, if they so come out with a TV, it will be reminiscent of the new iMac, super thin with tapered edges.

Q: What will happen with the fiscal cliff?
A: We will go over it, and eventually negotiations will cease as everyone slowly realizes that this is exactly what the President wants. In other words, there will be no deal.

Q: What will happen with the debt ceiling?
A: Boehner will extend it in exchange for some token concessions or even promises of concessions some years out.

Q: How much longer does Boehner remain speaker of the house?
A: He’ll be out by Memorial Day.

Q: Who will replace Boehner as speaker of the house?
A: It will be a dark horse. Somebody unexpected.

Q: Is Hillary Clinton actually sick? What is she up to?
A: She is not sick. I think she is just done with politics, and wants out. She especially doesn’t want to answer for what happened in Bengazi, because she’s being set up to be the fall guy when she doesn’t think that what happened was her fault.

Q: Will David Gregory be prosecuted for violating Washington DC’s gun laws?
A: You’re kidding, right?

Q: Will any new gun control laws be passed at the federal level as a result of the Newtown massacre?
A: No new gun laws will pass the house, thus no new gun laws will pass.

Q: Will Scott Brown win the special election for John Kerry’s seat in Massachusetts?
A: I’m going to say no on this one. Radicals are pretty energized and they won’t let him win again. Plus Brown pissed off a lot of his base, making them less than energized.

Q: What will the price of bitcoins be at year’s end?
A: Around $30.

I guess that’s it since I can’t think of anything else. Let me know what you think. We’ll revisit this in a year as usual.

 
 

Bitcoin and the NSA

Monday, April 25th, 2011

Bitcoin utilizes something called elliptical curve encryption in its processes. I remember back in the day, attending Bob Hettinga’s “Digital Commerce Society of Boston” meetings, and hearing this discussed then That was about 15 years ago now. I’m not a cryptographer, but from what I remember, elliptical curve encryption offered extraordinarily strong encryption without requiring an extraordinary amount of processing power. It was envisioned at the time that this method of encryption would be extremely useful in mobile devices.

My question is simple: Has the NSA broken elliptical curve encryption yet? And if they have, would they have it within their power to destroy Bitcoin?

If the NSA has broken elliptical curve encryption, they surely wouldn’t announce such a capability. But it does mean that if the US Federal Government wanted to, they could crush Bitcoin in seconds flat, inflating it beyond measure. By doing so, they would announce to the world that they can break elliptical curve encryption, but maybe that would be worth doing in certain circumstances.

But put aside the NSA for a moment. Theoretically, there is also what I would call the MC Frontalot problem as well. In his song, Secrets From The Future, he writes:

You can’t hide secrets from the future with math.
You can try, but I bet that in the future they laugh
at the half-assed schemes and algorithms amassed
to enforce cryptographs in the past.

The point being, that even the best cryptography today is likely to be broken, even by brute force, at some point in the future. So my question is, how is the Bitcoin development community planning to work around the MC Frontalot problem? Physical currency gets recalled and re-issued with new anti-counterfeiting measures added periodically, but what’s the equivalent for Bitcoin? I assume somebody has already asked this question, but I thought I’d ask it here in any event.

BTW, I have a new Bitcoin tip jar in the sidebar. Thanks in advance to anyone who hits it.

 
 

Bitcoin and Amazon

Tuesday, April 12th, 2011

So I’ve been giving a lot of thought to Bitcoin. I was introduced to it by listening to the EconTalk podcast on Bitcoins. Russ Roberts, the host, touched on many important issues regarding Bitcoins, but in my opinion, missed on some others. I want to think out loud on the blog about some of those issues today.

So for those who are unfamiliar, or too lazy to click the links above, Bitcoins are an alternate online currency, whose units are limited, and whose distribution is completely decentralized, unlike previous attempts at online currencies such as beenz or flooz. What this means in practicality is that nobody can inflate currency. Bitcoins are generated at a rate of 50 every ten minutes, and will stop being generated once there are 21 million Bitcoins in circulation, which are divisible down to 8 decimal places. By downloading the Bitcoin software and leaving it running on your machine, you enter into lottery to receive the 50 Bitcoins generated every ten minutes. So you can either get Bitcoins by waiting to win the lottery, or by trading goods or services for Bitcoins. By all accounts, the Bitcoin system is cryptographically sound and hacker proof.

So what’s the point?

Well, there are a few major points that hit me immediately. The first is that this is in essence, the world’s first fiat currency that literally cannot be inflated (Is it even appropriate to call this a fiat currency, since it’s not decreed by force? Can we even call it a paper currency?). This represents an enormous achievement. The second thing that hits me is that in a world of high inflation, this may prove to be a valuable currency worth using, a thought not lost on Russ Roberts or on the creators of the currency. The third thing that occurs to me, that was not at all touched on in the podcast, is that the existence of such a currency proves an enormous threat to Paypal, Visa, MasterCard, American Express, and every bank that makes money on ATM fees and checking accounts. It is, to put is mildly, completely insane that 17 years after the creation of the world wide web, we still pay fees to these types of companies to electronically move money around for us. Arguably, if we had a congress or federal government that did its job, they would have already developed a digital, cryptographically sound currency for us to be able to exchange electronically by now, but we don’t. Regardless, it is this last thought that really makes me think that Bitcoin may have legs.

When you go shopping at a retail establishment, you have likely noticed that many stores try to get you to use cash under a certain dollar amount. Moreover, most retail establishments, but particularly the ones that sell high-ticket items, really try to direct consumers to use their debit cards over their credit cards. This is solely because of the difference between the fees generates when using the debit network vs the credit card networks. Imagine if your will, how much money a company such as Amazon spends on credit card fees. Amazon could allocate a tiny portion of that to Bitcoin development, and the long term rewards would be enormous. Moreover, they could operate an exchange for Bitcoins to existing currencies, one that would be much cheaper and more easily accessible than the current solutions, which charge exorbitant fees or use existing systems such as Paypal to conduct the exchange. Amazon could simply enable merchants to accept Bitcoins, and offer dollar exchanges for flat fees, and potentially initiate a tidal wave.

So the Bitcoin thing has really got my wheels turning. You have a real online currency, with real incentive for major retailers to back it and get out from under the credit card companies. This thing potentially has legs. So i’m going to blog my thoughts about Bitcoins in a few blog posts. I’m sorry if this sort of thing bores you.