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pages: 273 words: 72,024

Bitcoin for the Befuddled by Conrad Barski

Airbnb, AltaVista, altcoin, bitcoin, blockchain, buttonwood tree, cryptocurrency, Debian, en.wikipedia.org, Ethereum, ethereum blockchain, fiat currency, Isaac Newton, MITM: man-in-the-middle, money: store of value / unit of account / medium of exchange, Network effects, node package manager, p-value, peer-to-peer, price discovery process, QR code, Satoshi Nakamoto, self-driving car, SETI@home, software as a service, the payments system, Yogi Berra

A Simple JavaScript Program Appendix B: Bitcoin Programming with BitcoinJ Index CONTENTS IN DETAIL PREFACE Acknowledgments Chapter 1: WHAT IS BITCOIN? Why Bitcoin Now? The Benefits of Using Bitcoin The Complexity and Confusion of Bitcoin What’s in This Book? Chapter 2: BITCOIN BASICS How Bitcoin Works in Simple Terms Bitcoin Units The Bitcoin Address The Private Key The Bitcoin Wallet Creating Your First Bitcoin Wallet with Electrum Acquiring Bitcoins in Your Wallet Spending Bitcoins with Your Wallet Bitcoin Addresses Generated by Your Bitcoin Wallet Program The Blockchain The Blockchain Lottery Blockchain Forking Transaction Confirmations, Double Spending, and Irreversibility Mining Bitcoins The Complexity of the Bitcoin System Chapter 3: STORING YOUR BITCOINS SAFELY, SECURELY, AND CONVENIENTLY Storing Your Private Key(s) Hot Storage vs.

On Mac, download homebrew, a command-line tool that will handle the entire process for you: # Get homebrew and if you haven't already ruby -e "$(curl -fsSL https://raw.github.com/Homebrew/homebrew/go/install)" brew tap phinze/homebrew-cask brew install brew-cask # Get node.js and bitcoin stuff brew cask install bitcoin brew install nodejs npm npm install bitcoin # Run bitcoin-qt in server mode ~/Applications/Bitcoin-Qt.app/Contents/MacOS/./Bitcoin-Qt -server For Linux Folks If you’re using flavors of Debian Linux, such as Ubuntu, you’ll just use the PPA feature to install the libraries: sudo add-apt-repository ppa:bitcoin/bitcoin sudo apt-get update sudo apt-get install nodejs npm bitcoin-qt npm install bitcoin bitcoin-qt -server With a working Bitcoin Core server, we’re now ready to start programming. Hello Money! Okay, let’s write our first Bitcoin app. Simply type the following complete program into a file named hellomoney.js: var bitcoin = require("bitcoin"); var client = new bitcoin.Client({ host: 'localhost', port: 8332, user: 'myUsername', pass: 'myPassword' }); var previousBalance = 0; function mainLoop() { client.getBalance('*', 0, function (err, balance) { if (err) { console.log(err); } else if (balance > previousBalance) { console.log("Hello Money!

In this chapter, we’ll address the last two points by explaining the major concepts used in Bitcoin, namely the Bitcoin address, the private key, the Bitcoin wallet, and the blockchain. We’ll also briefly discuss Bitcoin mining and walk you through the process of receiving and sending your first bitcoins so you can see how the system works. But first, you need to understand the Bitcoin units in more detail. Bitcoin Units As explained in Chapter 1, Bitcoin refers collectively to the entire currency system, whereas bitcoins are the units of the currency. Although the total currency supply is capped at 21 million bitcoins, each one can be subdivided into smaller denominations; for example, 0.1 bitcoins and 0.001 bitcoins. The smallest unit, a hundred millionth of a bitcoin (0.00000001 bitcoins), is called a satoshi in honor of Satoshi Nakamoto.


pages: 296 words: 86,610

The Bitcoin Guidebook: How to Obtain, Invest, and Spend the World's First Decentralized Cryptocurrency by Ian Demartino

3D printing, AltaVista, altcoin, bitcoin, blockchain, buy low sell high, capital controls, cloud computing, corporate governance, crowdsourcing, cryptocurrency, distributed ledger, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, Firefox, forensic accounting, global village, GnuPG, Google Earth, Haight Ashbury, Jacob Appelbaum, Kevin Kelly, Kickstarter, litecoin, M-Pesa, Marc Andreessen, Marshall McLuhan, Oculus Rift, peer-to-peer, peer-to-peer lending, Ponzi scheme, prediction markets, QR code, ransomware, Ross Ulbricht, Satoshi Nakamoto, self-driving car, Skype, smart contracts, Steven Levy, the medium is the message, underbanked, WikiLeaks, Zimmermann PGP

And to all the freaks and geeks on the Internet for being the world’s greatest teachers. Thank you. CONTENTS Foreword Keywords Who’s Who SECTION I: WHAT IS BITCOIN? Chapter 1: Bitcoin 101: Blockchain Technology Chapter 2: A Practical Guide on How to Buy, Save, and Spend Bitcoins Chapter 3: Precursors, History and Creation, Satoshi’s White Paper Chapter 4: Who Runs Bitcoin? Chapter 5: What Gives Bitcoin Its Value? Chapter 6: Bitcoin: Anonymous or Pseudonymous? Chapter 7: Bitcoin and the Criminal Element Chapter 8: Mt. Gox: Bitcoin’s Defining Moment? Chapter 9: Other Bitcoin Scams and Common Tactics SECTION II: HOW TO INVEST IN BITCOIN Chapter 10: How to Buy Bitcoin with a Bank Account, Cash, or PayPal Chapter 11: Working for Bitcoin Chapter 12: Mining Chapter 13: HODL! Chapter 14: Day Trading Chapter 15: Altcoin Trading and Pump-and-Dumps Chapter 16: Peer-to-Peer Lending Chapter 17: Investing in Other Commodities Using Bitcoin SECTION III: WHAT CAN BITCOIN DO FOR ME?

Keywords altcoin: Short for “alternative cryptocurrency”; another cryptocurrency similar to Bitcoin. There are more than a thousand altcoins currently in existence; most are nearly exact copies of more successful cryptocurrencies, but some very innovative ones have been produced as well. ASIC: Application-specific integrated circuit. A piece of hardware designed to do one thing and one thing only. In the cryptocurrency world, it mines for a specific algorithm (SHA256, Scrypt, etc.). BFGMiner: The second most-popular Bitcoin-mining software. Bitcoin/bitcoin: Bitcoin with a capital B refers to Bitcoin the system, the network or the currency as a whole; bitcoin with a lowercase b refers to individual bitcoins, as in, “I have five bitcoins.” Bitcoin-Qt: Also called Bitcoin Core, it is the primary implementation of Bitcoin and what all other wallets and services are based on.

If wallet A sends wallet B five bitcoins and then wallet B sends five bitcoins to wallet C, it is easy enough to assume wallet A was sending wallet C five bitcoins using wallet B as an intermediary. Combining several Bitcoin users’ transactions makes it more difficult to track but not impossible. If wallet A, wallet B, and wallet C send bitcoins to a mixing service (wallet D) and then pass that money onto wallets E and F but don’t want outside sources knowing who sent what to whom, simply sending their bitcoin to wallet D is not enough. If wallet A puts two bitcoins, wallet B puts six bitcoins, and wallet C puts nine bitcoins into the CoinJoin wallet—and then two bitcoins are sent to wallet E in one transaction, another six are sent to wallet E in a second transaction, and nine bitcoins are sent to wallet F—then we can safely assume that wallet A sent two bitcoins to wallet E, wallet B sent six to wallet E and wallet C sent nine to wallet F.


pages: 457 words: 128,838

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey

Airbnb, altcoin, bank run, banking crisis, bitcoin, blockchain, Bretton Woods, buy and hold, California gold rush, capital controls, carbon footprint, clean water, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cryptocurrency, David Graeber, disintermediation, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, financial innovation, Firefox, Flash crash, Fractional reserve banking, hacker house, Hernando de Soto, high net worth, informal economy, intangible asset, Internet of things, inventory management, Joi Ito, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, money: store of value / unit of account / medium of exchange, Nelson Mandela, Network effects, new economy, new new economy, Nixon shock, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, underbanked, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP

Abed, Gabriel Abridello, Mike accelerators Accel Partners Adams, Douglas Afghan Citadel Afghanistan Africa A-Grade Investments Ahmadi, Parisa AIG Airbnb Akimbo Alamgir, Nadia Alcoholics Anonymous Aleph Alibaba Alipay Alisie, Mihai Allaire, Jeremy al-Qaeda altcoins dogecoin litecoin Realcoin Alyattes, King Alydian Amazon Amazon Cloud American Express AME Ventures Amidi, Saeed Andolfatto, David Andreessen, Marc Andreessen Horowitz Andresen, Gavin Android angel investors anonymity anonymous remailers AntMinter Antonopoulos, Andreas ANX Apache tribe APIs (application programming interfaces) Apple Argentina exchange houses in trust problem in Aristotle Armstrong, Brian ASIC (application specific integrated circuit) chips Assange, Julian assassination AstroPay AT&T Atlas ATS Australia Austrian school of economics automobile loan payments Avalon Average Is Over (Cowen) Babylonians Back, Adam Bacon, Francis Bagehot, Walter Banco Popular Banga, Ajay Bank of America Bank of England (BOE) bankruptcy banks, banking central fees of fractional reserve Glass-Steagall Act and ledger and Medici modern payment system centered around people excluded from system of shadow system of tellers in too-big-to-fail Baran, Paul Barbados Barbie, Johann Barclays Barrett, John barter Beckstrom, Rod Bel Bruno, Joe Bell, Jim Bernanke, Ben Betamax BitAngels BitCarbon bitcoin(s): addresses in artwork and songs about balance in blockchain ledger in boom in brand of carbon footprint of as commodity community around creation of; see also Nakamoto, Satoshi crime and cryptography mailing list and culture of as currency defined as deflationary currency dollar and double-spending of early adopters of encryption in evangelists of exchange rate of fraud and future of Genesis Block in imitators of, see altcoins issuance of meetups for mining, see bitcoin mining and miners merchants accepting as movement as payments protocol as property regulation of, see regulation release of reward program in security and software for symbols of as technology thefts of traceability of transaction confirmation in transaction fees and transaction malleability bug and transaction volumes of trust and value of volatility of wallets for wealth concentration and Wild West phase of work in Bitcoin 2.0 (Blockchain 2.0) bitcoin barons bitcoin.com Bitcoin Decentral Bitcoin Faucet Bitcoin Forum Bitcoin Foundation Bitcoinica Bitcoin Magazine Bitcoin Market bitcoin mining and miners ASICs in cloud at data centers Dr. Evil attack scenario and energy used by 51 percent attack threat and forks in the blockchain and pools rigs for satellites for selfish bitcoinrichlist.com Bitcoin Suisse Bitcointalk.org Bitex.la Bitfinex BitFury BitGo bit-gold BitInstant BitLanders BitLicense Bitmain BitPagos BitPay BitPesa Bitreserve bitsats BitShares Bits of Coin Bitstamp Bitt BitTorrent BlackNet Bliley, Thomas blockchain forks in Blockchain Blockchain 2.0 (Bitcoin 2.0) BlockCypher blockexplorer.com blocks Bloomberg Businessweek b-money Boost Boring, Perianne Braendgaard, Pelle Brafman, Ori Braintree brand Branson, Richard Brazil Bretton Woods system Breyer, Jim Brightcove Brikman, Yevgeniy Britain Britcoin British West Indies Britto, Arthur Brown & Williamson Bry, Charles BTC China BTC-e Bush, George H.

One of the first was Peter Vessenes: Blog post, “Bitcoin Startup Incubator, CoinLab, Launches in WA,” Bitcoin News Network, September 25, 2011, http://www.btcnn.com/2011/09/bitcoin-startup-incubator-coinlab.html. Bitcoin Magazine, founded by Mihai Alisie: According to Bitcoin Magazine “About Us” page, http://bitcoinmagazine.com/about-us/. In September 2012, the Bitcoin Foundation was founded: Jon Matonis, “Bitcoin Foundation Launches to Drive Bitcoin’s Advancement,” September 9, 2012, http://www.forbes.com/sites/jonmatonis/2012/09/27/bitcoin-foundation-launches-to-drive-bitcoins-advancement/. At that time, the Bitcoin Forum had about sixty-eight thousand members: Taken from statistics page at Bitcoin Forum, https://bitcointalk.org/index.php?action=stats. Beginning in March 2012, thefts totaling: “Bitcoinica, Twice Hacked in 2012, Is Being Sued,” Infosecurity Magazine, August 15, 2012, http://www.infosecurity-magazine.com/news/bitcoinica-twice-hacked-in-2012-is-being-sued/.

Just as songs that are sung at football games, artwork depicting the Stars and Stripes on the back of Jeeps, and stirring recitals of the Declaration of Independence help to burnish Americans’ faith in their nation’s greatness, so, too, can cultural production help strengthen other communities—even one formed around a currency. And so we find bitcoin literature, bitcoin poetry, bitcoin artwork, bitcoin photography, and bitcoin songs. It’s a striking demonstration of how much this idea has captured people’s imagination. Nobody writes songs about PayPal. “Oh, bitcoin, I know you’re gonna reign, gonna reign,” John Barrett sings in his bluegrass “Ode to Satoshi,” recorded in a studio in East Nashville, Tennessee. “Till everybody knows, everybody knows, till everybody knows your name.” He’s not alone in his choice of song topic: “10,000 Bitcoins” is a love song by Laura Saggers; “Bitcoin Barons” is a rap piece by YTCracker; and there are a handful of others. Meanwhile, the German artist Kuno Goda painted 200 Bitcoins, with the bitcoin logo repeated two hundred times on a canvas—a play on Andy Warhol’s 200 One-Dollar Bills.


pages: 387 words: 112,868

Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money by Nathaniel Popper

4chan, Airbnb, Apple's 1984 Super Bowl advert, banking crisis, Ben Horowitz, bitcoin, blockchain, Burning Man, buy and hold, capital controls, Colonization of Mars, crowdsourcing, cryptocurrency, David Graeber, Edward Snowden, Elon Musk, Extropian, fiat currency, Fractional reserve banking, Jeff Bezos, Julian Assange, Kickstarter, life extension, litecoin, lone genius, M-Pesa, Marc Andreessen, Mark Zuckerberg, Occupy movement, peer-to-peer, peer-to-peer lending, Peter Thiel, Ponzi scheme, price stability, QR code, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Simon Singh, Skype, slashdot, smart contracts, Startup school, stealth mode startup, the payments system, transaction costs, tulip mania, WikiLeaks

Central Intelligence Agency Coinapult, 174, 338 Coinbase (Bitcoin service). See also Ehrsam, Fred about the founding and operation, 203–204, 211–213 investment by Andreessen Horowitz, 293–295 maintaining private keys, 281 regulation of virtual currencies, 271 regulatory compliance, 236–237 response to Mt. Gox collapse, 315 transaction fees, 290 working with banks, 305–306 CoinLab, 138, 144, 200, 213 COIN (Nasdaq ticker symbol), 353 Collins, John, 265–266 conferences (Bitcoin and others) 2011 CIA interest in Bitcoin, 81 2011 NYC Bitcoin World Expo, 102–106, 135 2011 Thailand, Bitcoin, 104 2012 Amsterdam, Bitcoin, 104, 297–298 2012 Federal Reserve on money transfer, 132–133 2012 NYC, Bitcoin, 104 2013 Allen & Co., 181, 349 2013 Argentina, Bitcoin, 277–283 2013 San Jose, Bitcoin, 214–216 2014 Allen & Co., 262, 349, 353–355 2014 Austin, Bitcoin, 331–336 2014 Bitcoin Pacifica (Lake Tahoe), 337–345 2014 SXSW, 334–336 2014 Utrecht technology, 298 The Construction and Operation of Clandestine Drug Laboratories (Jack B.

They were also downloading and running the Bitcoin software. The number of downloads would jump from around three thousand in June to over twenty thousand in July. The day after the Slashdot piece appeared, Gavin Andresen’s Bitcoin faucet gave away 5,000 Bitcoins and was running empty. As he begged for donations, he marveled at the strength of the network: Over the last two days of Bitcoin being “slashdotted” I haven’t heard of ANY problems with Bitcoin transactions getting lost, or of the network crashing due to the load, or any problem at all with the core functionality. But while the Bitcoin software itself was working well, new users quickly ran up against the limitations of the Bitcoin ecosystem. Those who immediately wanted to acquire more Bitcoins than were available from Gavin’s faucet were left with only a few meager options, one of them a creaky, unreliable service that Martti had set up a few months earlier.

At the same time that he was buying, Roger announced on the Bitcoin forums that his computer hardware company, Memory Dealers, would immediately begin accepting payment in Bitcoin. Not long after that, he turned a regular Memory Dealers’ advertisement that he paid for on Free Talk Live into an advertisement for Bitcoin and crowdsourced the copy for the ad from the Bitcoin forums. Soon enough, he had put up a gold-and-black billboard, on the side of an expressway in Silicon Valley, with an enormous Bitcoin emblem and the phrase “We Accept Bitcoin,” over the Memory Dealers web address. The crowd on the forums went wild. “God I love Bitcoin!” one user wrote. “We needed this,” another said. Roger said he was looking to do even more: “I promise I’m doing whatever I can to help make Bitcoin succeed (Billboards, National radio ads, etc.).” Roger’s appearance on the scene coincided with the first mainstream news coverage for Bitcoin, which helped push the price up, and, in turn, led to more mainstream news coverage.


pages: 416 words: 106,532

Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond: The Innovative Investor's Guide to Bitcoin and Beyond by Chris Burniske, Jack Tatar

Airbnb, altcoin, asset allocation, asset-backed security, autonomous vehicles, bitcoin, blockchain, Blythe Masters, business cycle, business process, buy and hold, capital controls, Carmen Reinhart, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, commoditize, correlation coefficient, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, disintermediation, distributed ledger, diversification, diversified portfolio, Donald Trump, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, fiat currency, financial innovation, fixed income, George Gilder, Google Hangouts, high net worth, Jeff Bezos, Kenneth Rogoff, Kickstarter, Leonard Kleinrock, litecoin, Marc Andreessen, Mark Zuckerberg, market bubble, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, packet switching, passive investing, peer-to-peer, peer-to-peer lending, Peter Thiel, pets.com, Ponzi scheme, prediction markets, quantitative easing, RAND corporation, random walk, Renaissance Technologies, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, Sharpe ratio, Silicon Valley, Simon Singh, Skype, smart contracts, social web, South Sea Bubble, Steve Jobs, transaction costs, tulip mania, Turing complete, Uber for X, Vanguard fund, WikiLeaks, Y2K

The trifecta of current Bitcoiners defending and explaining the disruptive potential of Bitcoin’s technology, bitcoin’s price descending dramatically, and newcomers investigating the technology led to a seismic shift in the Bitcoin narrative. Newcomers didn’t necessarily see the need for bitcoin in the ways in which they wanted to use blockchain technology, and they felt reaffirmed in their belief by the continued descent of bitcoin’s price through 2014. But to Bitcoiners it had always been “bitcoin and blockchain.” The asset, bitcoin, was what incentivized an ecosystem of players—miners, developers, companies, and users—to secure and build upon Bitcoin’s blockchain, delivering means of exchange and store of value services to the world. Out of this examination of the technology underlying Bitcoin, two movements exploded in the blockchain technology space.

All that’s required is a concerted effort to nail down the key concepts, which then become the mental scaffolding that will support understanding of the many applications of blockchain technology. Bitcoin with an uppercase B refers to the software that facilitates the transfer and custody of bitcoin the currency, which starts with a lowercase b. • Bitcoin equals software. • bitcoin equals currency. Much of this book will use Bitcoin (with a capital B) as the starting point. Bitcoin is the genesis of the blockchain movement. It is common to compare newly created blockchains with Bitcoin’s because Bitcoin’s blockchain is the longest standing point of reference. Therefore, understanding the basics of Bitcoin is critical. However, to truly understand Bitcoin, one has to move beyond thinking of it as some digital Ponzi scheme or shadowy system used by criminals. Those are stale stories that continue to tumble through the media mill.

Cryptoassets have two drivers of their basis of value: utility and speculative. Digital units of bitcoin don’t exist beyond unspent transaction outputs—or credits—in bitcoin’s blockchain. Therefore, a significant portion of the basis of value is what the underlying blockchain enables the users of the assets to do; in other words, bitcoin’s utility value. Utility value refers to what the underlying blockchain is used for, and therefore what the demand is for its asset. For example, Bitcoin’s blockchain is used to transact bitcoin and therefore much of the value is driven by demand to use bitcoin as a means of exchange. Similarly, bitcoin can be used as a store of value, so a percentage of the bitcoin outstanding is demanded for that use case. All these use cases temporarily bind bitcoin, drawing it out of the supply of bitcoin outstanding. The more that people want to use bitcoin, the more they’ll have to pay to get access to it.


pages: 309 words: 54,839

Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts by David Gerard

altcoin, Amazon Web Services, augmented reality, Bernie Madoff, bitcoin, blockchain, Blythe Masters, Bretton Woods, clean water, cloud computing, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, distributed ledger, Ethereum, ethereum blockchain, Extropian, fiat currency, financial innovation, Firefox, Flash crash, Fractional reserve banking, index fund, Internet Archive, Internet of things, Kickstarter, litecoin, M-Pesa, margin call, Network effects, peer-to-peer, Peter Thiel, pets.com, Ponzi scheme, Potemkin village, prediction markets, quantitative easing, RAND corporation, ransomware, Ray Kurzweil, Ross Ulbricht, Ruby on Rails, Satoshi Nakamoto, short selling, Silicon Valley, Silicon Valley ideology, Singularitarianism, slashdot, smart contracts, South Sea Bubble, tulip mania, Turing complete, Turing machine, WikiLeaks

First edition, July 2017 Book site: www.davidgerard.co.uk/blockchain Contact the author: dgerard@gmail.com Cover art and design: Alli Kirkham www.punkpuns.com/author Contents A Bitcoin FAQ Introduction Chapter 1: What is a bitcoin? Why Bitcoin? What you have when you have “a bitcoin” The blockchain Secured by waste: Proof of Work Chapter 2: The Bitcoin ideology Libertarianism and cyberlibertarianism Pre-Bitcoin anonymous payment channels The prehistory of cryptocurrencies The conspiracy theory economics of Bitcoin Austrian economics Chapter 3: The incredible promises of Bitcoin! Decentralised! Secured by math! Anonymous! Instant! No fees! No chargebacks! Be your own bank! Better than Visa, PayPal or Western Union! Remittances! Bank the unbanked! Economic equality! The supply is limited! The price can only go up! But Bitcoin saved Venezuela! When the economy collapses, Bitcoin will save you! You can use Bitcoin to buy drugs on the Internet!

Then the total value of the currency should be equal to the total value of all the wealth in the world. Bitcoin advocates then adopted this idle musing as something that would obviously happen. The problem is that Bitcoin is deflationary. Let’s assume for a moment that Bitcoin economic theories work. As economic value traded in Bitcoins increases, the limited supply means the economic value per bitcoin goes up, which means that the price of things in bitcoins goes down. This means the dollar value of one bitcoin indeed goes up! However, it also means there’s absolutely no incentive to spend your bitcoins if they’ll always be worth more tomorrow. This means economic activity goes down, and if there are alternatives – other cryptocurrencies, or just using existing payment systems – Bitcoin loses users and interest. In practice, the price of Bitcoin goes up when there is demand for it as a speculative commodity, drops when demand drops and is hugely volatile because trading is so thin.

One member of the Wikimedia fundraising team noted in January 2014: “The bitcoin community should be aware that their persistent and often times aggressive, rude, and vulgar messaging towards me and my fellow coworkers is not appreciated; nor does it help their cause.”225) Overstock.com started accepting Bitcoin in early 2014 because CEO Patrick Byrne is a huge Bitcoin fan, and took in $1 million in the first month226 and another $2 million over the rest of 2014 – 0.2% of its total sales of $1.5 billion227 – though a loss of $117,000 on cryptocurrencies for 2015.228 WhollyHemp, a small manufacturer of hemp soap, started accepting Bitcoin out of interest in the technology, and founder Robert Lestak was for a time a moderator of Reddit /r/bitcoin. After the usual initial burst,229 WhollyHemp ended up making 0.2% of sales in Bitcoin, and an A/B test showed that prominent mention of Bitcoin acceptance reduced gross sales by 5.8%.230 They removed the Bitcoin option altogether in April 2015, and were harassed by Bitcoin advocates231 for the next several months.232 Lestak: “This is why you don’t hear about businesses publicly dropping Bitcoin as a payment option. Bitcoiners will make your life a living hell if you do.” “Mr. Bitcoin” at the Bitcoin Bowl. Photo: ©2014 Ben Gutzler. Hoping to drum up business with merchants, payment processor BitPay sponsored the St.


pages: 233 words: 66,446

Bitcoin: The Future of Money? by Dominic Frisby

3D printing, altcoin, bank run, banking crisis, banks create money, barriers to entry, bitcoin, blockchain, capital controls, Chelsea Manning, cloud computing, computer age, cryptocurrency, disintermediation, Ethereum, ethereum blockchain, fiat currency, fixed income, friendly fire, game design, Isaac Newton, Julian Assange, land value tax, litecoin, M-Pesa, mobile money, money: store of value / unit of account / medium of exchange, Occupy movement, Peter Thiel, Ponzi scheme, prediction markets, price stability, QR code, quantitative easing, railway mania, Ronald Reagan, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, Stephen Hawking, Steve Jobs, Ted Nelson, too big to fail, transaction costs, Turing complete, War on Poverty, web application, WikiLeaks

And you can pay for things with them via electronic banking, by cheque, credit card, or in cash. But where on earth do you get bitcoins? There are three ways. You can get paid in bitcoins. You can buy bitcoins. And last of all (the very unconventional bit), you can make bitcoins. Yes, you can, literally, create money. You earn bitcoins by doing or selling something in exchange for bitcoins – just as you would earn normal money. If I do this job for you, you pay me in bitcoins. You buy bitcoins just as you would buy and sell foreign currency – from the Bitcoin equivalent of a bureau de change, known as a Bitcoin exchange, or directly from an individual. You hand over your dollars, pounds or whatever currency you’re using and you receive bitcoins. To create bitcoins, you run the Bitcoin software on your computer. It’s called ‘mining’ – more on that later.

Accessed June 16, 2014. http://on.mash.to/1tHF8y5. ‘Bitcoin Forum.’ Bitcoin Forum –Index. Accessed June 16, 2014. http://bit.ly/1tHF7KI. ‘Bitcoin? Here’s What Warren Buffett Is Saying.’ CNBC. March 14, 2013. Accessed June 16, 2014. http://cnb.cx/1tHF7KJ. ‘Bitcoin Project Milestones’. Bitcoin Project Milestones. Tiki Toki. Accessed June 16, 2014. http://bit.ly/1tHF8y6. ‘Bitcoin Wiki.’ Bitcoin. Accessed June 16, 2014. http://bit.ly/1tHF7KK. ‘BitcoinTalk.’ BitcoinTalk.com. Accessed June 16, 2014. http://bit.ly/1tHF8y8. Branwen, Gwern. ‘Bitcoin – worse is better.’ Gwern.net. July 20, 2010. http://bit.ly/1tHF7KL. Branwen, Gwern. ‘Silk Road: theory & practice.’ Gwern.net. June 2011. http://bit.ly/1tHF8y9. Brito, Jerry. ‘Online cash Bitcoin could challenge governments, banks.’ Time. April 16, 2011.

What actually happens when you send an email through Gmail to, say, someone with a Yahoo address is that a Google server reaches out to a Yahoo server and transmits a text file; then the Yahoo server says to its user, ‘you’ve got mail’. So, a protocol is an agreed system by which information is shared across a network. Bitcoin – with a capital ‘B’ – is another protocol. The function of the protocol is to send and receive payment information. With Bitcoin, your computer reaches out to another user’s computer, gives it some binary gibberish proving you control X number of coins at this address and want them to increase the balance at that address. The unit of money on the Bitcoin protocol is the ‘bitcoin’ (with a small ‘b’). As the dollar is the unit of money on the US banking network, so bitcoin is the unit of money on the Bitcoin system. So, Bitcoin is two things – a protocol and a unit of money. How do you get bitcoins? Using dollars or pounds is easy. You get paid in them. They’re in your bank account (hopefully).


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The Politics of Bitcoin: Software as Right-Wing Extremism by David Golumbia

3D printing, A Declaration of the Independence of Cyberspace, Affordable Care Act / Obamacare, bitcoin, blockchain, Burning Man, crony capitalism, cryptocurrency, currency peg, distributed ledger, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, Extropian, fiat currency, Fractional reserve banking, George Gilder, jimmy wales, litecoin, Marc Andreessen, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, new economy, obamacare, Peter Thiel, Philip Mirowski, risk tolerance, Ronald Reagan, Satoshi Nakamoto, seigniorage, Silicon Valley, Singularitarianism, smart contracts, Stewart Brand, technoutopianism, The Chicago School, Travis Kalanick, WikiLeaks

“Everything I Was Afraid to Ask about Bitcoin but Did.” Naked Capitalism (November). http://www.nakedcapitalism.com/. “Myths.” Bitcoin wiki. http://en.bitcoin.it/. Nakamoto, Satoshi. 2008. “Bitcoin: A Peer-to-Peer Electronic Cash System.” Bitcoin.org. http://bitcoin.org/. —. 2009. “Bitcoin Open Source Implementation of P2P Currency.” P2P Foundation (February 11). http://p2pfoundation.ning.com/. Naughton, John. 2016. “Is Blockchain the Most Important IT Invention of Our Age?” The Guardian (January 24). http://www.theguardian.com. O’Dwyer, Rachel. 2015. “The Revolution Will (Not) Be Decentralized: Blockchain-Based Technologies and the Commons.” Academia.edu. https://www.academia.edu/. Otar, Okropir. 2015. “Mining Consolidation: The Bitcoin Guillotine?” Bitcoin News Channel (December 20). http://bitcoinnewschannel.com/.

This way, Bitcoin wallets can calculate their spendable balance and new transactions can be verified to be spending bitcoins that are actually owned by the spender. The integrity and the chronological order of the blockchain are enforced with cryptography” (“How Does Bitcoin Work?”). Computers that participate in the verification process are rewarded with fractional amounts of Bitcoin. This is the exclusive means by which Bitcoin is created; the process is known as mining, in a deliberate reference to gold. The blockchain is large and processing it requires significant computing power; in fact, because it is a record of all Bitcoin transactions ever, any computer participating in Bitcoin mining must today have substantial networking and processing capabilities. While in its early days Bitcoin could be mined by relatively fast home computers, today most mining is done by pools of dedicated high-power systems, due to the increasing difficulty in generating a “hash” designed into the blockchain model.

As many economists have pointed out, though, virtually anything can serve as a medium of exchange, and nonmonetary media of exchange proliferate in our world: from frequent flyer miles to credit card bonus point programs, from grocery store coupons to high-value goods like fine art, precious metals, and gems.[2] None of these alternative currencies poses any threat whatsoever to national sovereignty over money, let alone national sovereignty itself. Yet Bitcoin advocates frequently attempt to redefine money as if the term refers only to medium of exchange. Whether Bitcoin serves the unit of account or measure of value function is much less clear. It is rare, though not unheard of, for markets to exist that price their goods only in Bitcoin, and rarer still for those prices to exist in relation to nothing other than Bitcoin: that is to say, even the infamous deep web drug marketplaces like Silk Road and its various offshoots clearly set the Bitcoin prices for their goods according to their value in official world currencies, despite having prices nominally listed in Bitcoin (i.e., those prices rise and fall with changes not just in Bitcoin’s valuation, but in the price of drugs in national currencies). Exactly because Bitcoin lacks any relationship to bodies that need the currency to exist in relationship to mechanisms of international exchange, or of state-internal matters like taxes, Bitcoin on its own floats free of any anchor to ordinary valuing processes.


pages: 200 words: 47,378

The Internet of Money by Andreas M. Antonopoulos

AltaVista, altcoin, bitcoin, blockchain, clean water, cognitive dissonance, cryptocurrency, disruptive innovation, Ethereum, ethereum blockchain, financial exclusion, global reserve currency, litecoin, London Interbank Offered Rate, Marc Andreessen, Oculus Rift, packet switching, peer-to-peer lending, Ponzi scheme, QR code, ransomware, reserve currency, Satoshi Nakamoto, self-driving car, Skype, smart contracts, the medium is the message, trade route, underbanked, WikiLeaks, zero-sum game

That’s the essence of a master-slave relationship. "Bitcoin is fundamentally different because in bitcoin, you don’t owe anyone anything and no one owes you anything. It’s not a system based on debt." Bitcoin is fundamentally different because in bitcoin, you don’t owe anyone anything and no one owes you anything. It’s not a system based on debt. It’s a system based on ownership of this abstract token. Absolute ownership. We have an expression in the United States, which is “possession is nine-tenths of the law.” In bitcoin, possession is ten-tenths of the law. If you control the bitcoin keys, it’s your bitcoin. If you don’t control the bitcoin keys, it’s not your bitcoin. You’re back to a master-slave relationship. "In bitcoin, possession is ten-tenths of the law. If you control the bitcoin keys, it’s your bitcoin. If you don’t control the bitcoin keys, it’s not your bitcoin." 2.4.

There is a beautiful site called bitcoinobituaries.com where you can read the pronouncements of the death of bitcoin since 2009 — regularly, like clockwork every three to six months, major newspapers, scientists, etc., saying, "That’s it. Bitcoin is dead." In fact, this has now become an amazing recruitment opportunity because all you have to do is wait for people to hear that bitcoin died, the CEO of Bitcoin was arrested, or bitcoin was shut down by Putin, and then, four months later, someone says, "You know there are some interesting new applications on bitcoin." And they go, “Bitcoin is still there?" “Bitcoin is still there” is the marketing slogan of this community. If we can just keep doing “bitcoin is still there,” people are surprised, they’re confounded. It doesn’t match their expectations. It’s not possible that bitcoin is still there because very serious people with very serious titles, working for very rich companies, told them that bitcoin was not going to be there.

When people hear that message, maybe the next day they come to one of these meetups and they meet a dentist who owns bitcoin, an architect who owns bitcoin, a taxi driver who uses bitcoin to send money back to their family—normal people who use bitcoin to give themselves financial power and financial freedom. Every time that message is broken by cognitive dissonance, bitcoin wins. All bitcoin really has to do is survive. So far, it’s doing pretty well. 3.11. Currencies Evolve In the new network-centric world, currencies occupy evolutionary niches. They evolve, like species, based on the stimulus they have from their environment. Bitcoin is a dynamic system with software developers that can change it. The question is, in which direction will bitcoin evolve? Which environmental niche will it attempt to fit in? And how will that be affected by the actions of the powerful? If they attack bitcoin, it evolves to defend itself against predators, just like any species.


pages: 271 words: 52,814

Blockchain: Blueprint for a New Economy by Melanie Swan

23andMe, Airbnb, altcoin, Amazon Web Services, asset allocation, banking crisis, basic income, bioinformatics, bitcoin, blockchain, capital controls, cellular automata, central bank independence, clean water, cloud computing, collaborative editing, Conway's Game of Life, crowdsourcing, cryptocurrency, disintermediation, Edward Snowden, en.wikipedia.org, Ethereum, ethereum blockchain, fault tolerance, fiat currency, financial innovation, Firefox, friendly AI, Hernando de Soto, intangible asset, Internet Archive, Internet of things, Khan Academy, Kickstarter, lifelogging, litecoin, Lyft, M-Pesa, microbiome, Network effects, new economy, peer-to-peer, peer-to-peer lending, peer-to-peer model, personalized medicine, post scarcity, prediction markets, QR code, ride hailing / ride sharing, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, SETI@home, sharing economy, Skype, smart cities, smart contracts, smart grid, software as a service, technological singularity, Turing complete, uber lyft, unbanked and underbanked, underbanked, web application, WikiLeaks

Broader Perspective blog, March 2, 2014. http://futurememes.blogspot.fr/2014/03/illiberty-in-biohacking-personal-data.html. 108 Prisco, G. “Bitcoin Governance 2.0: Let’s Block-chain Them.” CryptoCoins News, updated October 13, 2014. https://www.cryptocoinsnews.com/bitcoin-governance-2-0-lets-block-chain/. 109 Hofman, A. “Couple to Get Married on the Bitcoin Blockchain at Disney Bitcoin Conference.” Bitcoin Magazine, September 23, 2014. http://bitcoinmagazine.com/16771/couple-get-married-bitcoin-blockchain-disney-bitcoin-conference/. 110 Marty, B. “Couple Make History with World’s First Bitcoin Wedding.” PanAm Post, October 7, 2014. http://panampost.com/belen-marty/2014/10/07/couple-make-history-with-worlds-first-bitcoin-wedding/. 111 Ploshay, E. “A Word from Jeffrey Tucker: Bitcoin Is Not a Monetary System.” Bitcoin Magazine, January 3, 2014. http://bitcoinmagazine.com/9299/word-jeffrey-tucker-bitcoin-monetary-system/. 112 McMillan, R.

PayPal had been known for being on the edge of financial innovation, but it then became more corporate focused and lost the possibility of providing early market leadership with regard to Bitcoin. Now, PayPal has been incorporating Bitcoin slowly, as of September 2014 announcing partnerships with three major Bitcoin payment processors: BitPay, Coinbase, and GoCoin.37 Also in September 2014, Paypal’s Braintree unit (acquired in 2013), a mobile payments provider, is apparently working on a feature with which customers can pay for Airbnb rentals and Uber car rides with Bitcoin.38 In the same area of regulation-compliant Bitcoin complements to traditional financial services is the notion of a “Bitbank.” Bitcoin exchange Kraken has partnered with a bank to provide regulated financial services involving Bitcoin.39 There is a clear need for an analog to and innovation around traditional financial products and services for Bitcoin—for example, Bitcoin savings accounts and lending (perhaps through user-selected rules regarding fractional reserve levels).

The account is necessarily incomplete, prone to technical errors (though it has been reviewed for technical accuracy by experts), and, again, could likely soon be out-of-date as different projects described here fail or succeed. Or, the entire Bitcoin and blockchain technology industry as currently conceived could become outmoded or superseded by other models. The underlying sources of this work are a variety of information resources related to Bitcoin and its development. The principal sources are developer forums, Reddit subgroups, GitHub white papers, podcasts, news media, YouTube, blogs, and Twitter. Specific online resources include Bitcoin industry conference proceedings on YouTube and Slideshare, podcasts (Let’s Talk Bitcoin, Consider This!, Epicenter Bitcoin), EtherCasts (Ethereum), Bitcoin-related news outlets (CoinDesk, Bitcoin Magazine, Cryptocoins News, Coin Telegraph), and forums (Bitcoin StackExchange, Quora). Other sources were email exchanges and conversations with practitioners in the industry as well as my experiences attending conferences, Bitcoin workshops, Satoshi Square trading sessions, and developer meetups.


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The Bitcoin Standard: The Decentralized Alternative to Central Banking by Saifedean Ammous

Airbnb, altcoin, bank run, banks create money, bitcoin, Black Swan, blockchain, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, conceptual framework, creative destruction, cryptocurrency, currency manipulation / currency intervention, currency peg, delayed gratification, disintermediation, distributed ledger, Ethereum, ethereum blockchain, fiat currency, fixed income, floating exchange rates, Fractional reserve banking, full employment, George Gilder, global reserve currency, high net worth, invention of the telegraph, Isaac Newton, iterative process, jimmy wales, Joseph Schumpeter, market bubble, market clearing, means of production, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, Paul Samuelson, peer-to-peer, Peter Thiel, price mechanism, price stability, profit motive, QR code, ransomware, reserve currency, Richard Feynman, risk tolerance, Satoshi Nakamoto, secular stagnation, smart contracts, special drawing rights, Stanford marshmallow experiment, The Nature of the Firm, the payments system, too big to fail, transaction costs, Walter Mischel, zero-sum game

A lot of media hype was generated and the sense of crisis was palpable to many who follow Bitcoin news on mainstream media and social media; yet the reality remained that no fork was attempted, as the majority of nodes continued to run on the 1MB‐compatible implementations. Finally, in August 2017, a group of programmers proposed a new fork of Bitcoin under the name of “Bitcoin Cash,” which included many of the earlier advocates of increasing the block size. The fate of Bitcoin Cash is a vivid illustration of the problems with a Bitcoin fork that does not have consensus support. Because a majority chose to stay with the original chain, and the economic infrastructure of exchanges and businesses supporting Bitcoin is still largely focused on the original Bitcoin, this has kept the value of Bitcoin's coins much higher than that of Bitcoin Cash, and the price of Bitcoin Cash continued to drop until it hit a low of 5% of Bitcoin's value in November 2017.

Only with such an understanding, and only after extensive and thorough research into the practical operational aspects of owning and storing bitcoins, should anyone consider holding value in Bitcoin. While bitcoin's rise in market value may make it appear like a no‐brainer as an investment, a closer look at the myriad hacks, attacks, scams, and security failures that have cost people their bitcoins provides a sobering warning to anyone who thinks that owning bitcoins provides a guaranteed profit. Should you come out of reading this book thinking that the bitcoin currency is something worth owning, your first investment should not be in buying bitcoins, but in time spent understanding how to buy, store, and own bitcoins securely. It is the inherent nature of Bitcoin that such knowledge cannot be delegated or outsourced. There is no alternative to personal responsibility for anyone interested in using this network, and that is the real investment that needs to be made to get into Bitcoin.

But as long as there are people who want to use it, it's very hard to kill, or corrupt, or stop, or interrupt.6 Bitcoin is a technology that survives for the very same reason the wheel, knife, phone, or any technology survives: it offers its users benefits from using it. Users, miners, and node operators are all rewarded economically from interacting with Bitcoin, and that is what keeps it going. It's worth adding that all the parties that make Bitcoin work are individually dispensable to its operation. Nobody is essential to Bitcoin, and if anybody wants to alter Bitcoin, Bitcoin is perfectly capable of continuing to operate as it is without whatever input anyone has on this. This will help us understand the immutable nature of Bitcoin in Chapter 10, and why attempts at making serious changes to the Bitcoin code will almost inevitably lead to the creation of a knockoff version of Bitcoin, but one that cannot possibly recreate the economic balance of incentives that keeps Bitcoin operational and immutable.


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Bitcoin Billionaires: A True Story of Genius, Betrayal, and Redemption by Ben Mezrich

"side hustle", airport security, Albert Einstein, bank run, Ben Horowitz, bitcoin, blockchain, Burning Man, buttonwood tree, cryptocurrency, East Village, El Camino Real, Elon Musk, family office, fault tolerance, fiat currency, financial innovation, game design, Isaac Newton, Marc Andreessen, Mark Zuckerberg, Menlo Park, Metcalfe’s law, new economy, offshore financial centre, paypal mafia, peer-to-peer, Peter Thiel, Ponzi scheme, QR code, Ronald Reagan, Ross Ulbricht, Sand Hill Road, Satoshi Nakamoto, Schrödinger's Cat, self-driving car, side project, Silicon Valley, Skype, smart contracts, South of Market, San Francisco, Steve Jobs, transaction costs, zero-sum game

He was not an entirely unfamiliar type of character to the Winklevoss brothers. “ ‘Bitcoin’ with a capital B refers to the protocol, in other words, the entire Bitcoin Network,” Voorhees said, his more measured tone a stark contrast to Charlie’s verbal sprint. “While ‘bitcoin’ with a lowercase b refers to the digital asset that travels along the Bitcoin Network.” “Same word, two different meanings, case dependent,” Charlie inserted. “Protocols are the digital plumbing of the internet,” Voorhees continued. “They are the pipes that your emails travel through, the tunnels that carry your voice to a listener halfway around the world. The Bitcoin protocol allows bitcoin to move from point A to point B, and allows you to buy this miniature oil can of NEFT Vodka.” “The analogy seems dangerous,” Cameron said. “If ‘Bitcoin’ with a capital B is plumbing, what makes ‘bitcoin’ lowercase b anything more than digital sewage?”

“Gold is valuable because of its naturally occurring properties: it’s scarce, durable, portable, divisible, fungible, hard to counterfeit, and easy to authenticate,” Tyler said. “Exactly,” Voorhees responded, “and bitcoin has all of those properties too—” “But Bitcoin is better at being gold than gold,” Charlie interrupted. “Correct. Bitcoin is not just scarce like gold, but its supply is also fixed,” Voorhees said. “By the design laid out in Satoshi Nakamoto’s original white paper, there will never be more than twenty-one million bitcoins created, whereas the supply of gold increases as new deposits are discovered. And bitcoin is more divisible than gold. Each bitcoin can be subdivided into one hundred million pieces, and you can own as little as .00000001 bitcoin. And you can send it to someone instantly, like sending an email. Try emailing someone a bar of gold.” “It’s gold with wings, gold 2.0!”

The answer is what makes the whole Bitcoin system work: mining.” Cameron had only had a few hours of internet reading to wrap his thoughts around the “mining” system, which acted as the engine to the Bitcoin ecosystem. He still didn’t have a complete grasp of how it all worked—but what he already knew fascinated him. Voorhees explained how Bitcoin “miners”—people with computers running specialized software—validate and audit bitcoin transactions by solving complex math problems generated by the transactions themselves. Once a miner has solved the math puzzle for a new “block” of transactions, the block is added to the Bitcoin “blockchain,” the global ledger of every bitcoin transaction since the beginning of time. For their effort, miners were rewarded by the network with newly minted bitcoins. This is known as the “block reward.”


Mastering Blockchain, Second Edition by Imran Bashir

3D printing, altcoin, augmented reality, autonomous vehicles, bitcoin, blockchain, business process, carbon footprint, centralized clearinghouse, cloud computing, connected car, cryptocurrency, data acquisition, Debian, disintermediation, disruptive innovation, distributed ledger, domain-specific language, en.wikipedia.org, Ethereum, ethereum blockchain, fault tolerance, fiat currency, Firefox, full stack developer, general-purpose programming language, gravity well, interest rate swap, Internet of things, litecoin, loose coupling, MITM: man-in-the-middle, MVC pattern, Network effects, new economy, node package manager, Oculus Rift, peer-to-peer, platform as a service, prediction markets, QR code, RAND corporation, Real Time Gross Settlement, reversible computing, RFC: Request For Comment, RFID, ride hailing / ride sharing, Satoshi Nakamoto, single page application, smart cities, smart contracts, smart grid, smart meter, supply-chain management, transaction costs, Turing complete, Turing machine, web application, x509 certificate

PacktPub.com Contributors About the author About the reviewer Packt is searching for authors like you Preface Who this book is for What this book covers To get the most out of this book Download the example code files Download the color images Conventions used Get in touch Reviews Blockchain 101 The growth of blockchain technology Distributed systems The history of blockchain and Bitcoin Electronic cash Blockchain Blockchain defined Peer-to-peer Distributed ledger Cryptographically-secure Append-only Updateable via consensus Generic elements of a blockchain How blockchain works How blockchain accumulates blocks Benefits and limitations of blockchain Tiers of blockchain technology Features of a blockchain Types of blockchain Distributed ledgers Distributed Ledger Technology Public blockchains Private blockchains Semiprivate blockchains Sidechains Permissioned ledger Shared ledger Fully private and proprietary blockchains Tokenized blockchains Tokenless blockchains Consensus Consensus mechanism Types of consensus mechanisms Consensus in blockchain CAP theorem and blockchain Summary Decentralization Decentralization using blockchain Methods of decentralization Disintermediation Contest-driven decentralization Routes to decentralization How to decentralize The decentralization framework example Blockchain and full ecosystem decentralization Storage Communication Computing power and decentralization Smart contracts Decentralized Organizations Decentralized Autonomous Organizations Decentralized Autonomous Corporations Decentralized Autonomous Societies Decentralized Applications (DApps) Requirements of a Decentralized Application Operations of a DApp DApp examples KYC-Chain OpenBazaar Lazooz Platforms for decentralization Ethereum MaidSafe Lisk Summary Symmetric Cryptography Working with the OpenSSL command line Introduction Mathematics Set Group Field A finite field Order An abelian group Prime fields Ring A cyclic group Modular arithmetic Cryptography Confidentiality Integrity Authentication Entity authentication Data origin authentication Non-repudiation Accountability Cryptographic primitives Symmetric cryptography Stream ciphers Block ciphers Block encryption mode Electronic Code Book Cipher Block Chaining Counter mode Keystream generation mode Message authentication mode Cryptographic hash mode Data Encryption Standard Advanced Encryption Standard How AES works Summary Public Key Cryptography Asymmetric cryptography Integer factorization Discrete logarithm Elliptic curves Public and private keys RSA Encryption and decryption using RSA Elliptic Curve Cryptography Mathematics behind ECC Point addition Point doubling Discrete logarithm problem in ECC RSA using OpenSSL RSA public and private key pair Private key Public key Exploring the public key Encryption and decryption Encryption Decryption ECC using OpenSSL ECC private and public key pair Private key Private key generation Hash functions Compression of arbitrary messages into fixed-length digest Easy to compute Preimage resistance Second preimage resistance Collision resistance Message Digest Secure Hash Algorithms Design of Secure Hash Algorithms Design of SHA-256 Design of SHA-3 (Keccak) OpenSSL example of hash functions Message Authentication Codes MACs using block ciphers Hash-based MACs Merkle trees Patricia trees Distributed Hash Tables Digital signatures RSA digital signature algorithm Sign then encrypt Encrypt then sign Elliptic Curve Digital Signature Algorithm How to generate a digital signature using OpenSSL ECDSA using OpenSSL Homomorphic encryption Signcryption Zero-Knowledge Proofs Blind signatures Encoding schemes Financial markets and trading Trading Exchanges Orders and order properties Order management and routing systems Components of a trade The underlying instrument General attributes Economics Sales Counterparty Trade life cycle Order anticipators Market manipulation Summary Introducing Bitcoin Bitcoin Bitcoin definition Bitcoin – a bird's-eye view Sending a payment to someone Digital keys and addresses Private keys in Bitcoin Public keys in Bitcoin Addresses in Bitcoin Base58Check encoding Vanity addresses Multisignature addresses Transactions The transaction life cycle Transaction fee Transaction pools The transaction data structure Metadata Inputs Outputs Verification The script language Commonly used opcodes Types of transactions Coinbase transactions Contracts Transaction verification Transaction malleability Blockchain The structure of a block The structure of a block header The genesis block Mining Tasks of the miners Mining rewards Proof of Work (PoW) The mining algorithm The hash rate Mining systems CPU GPU FPGA ASICs Mining pools Summary Bitcoin Network and Payments The Bitcoin network Wallets Non-deterministic wallets Deterministic wallets Hierarchical Deterministic wallets Brain wallets Paper wallets Hardware wallets Online wallets Mobile wallets Bitcoin payments Innovation in Bitcoin Bitcoin Improvement Proposals (BIPs) Advanced protocols Segregated Witness (SegWit) Bitcoin Cash Bitcoin Unlimited Bitcoin Gold Bitcoin investment and buying and selling bitcoins Summary Bitcoin Clients and APIs Bitcoin installation Types of Bitcoin Core clients Bitcoind Bitcoin-cli Bitcoin-qt Setting up a Bitcoin node Setting up the source code Setting up bitcoin.conf Starting up a node in testnet Starting up a node in regtest Experimenting with Bitcoin-cli Bitcoin programming and the command-line interface Summary Alternative Coins Theoretical foundations Alternatives to Proof of Work Proof of Storage Proof of Stake (PoS) Various stake types Proof of coinage Proof of Deposit (PoD) Proof of Burn Proof of Activity (PoA) Nonoutsourceable puzzles Difficulty adjustment and retargeting algorithms Kimoto Gravity Well Dark Gravity Wave DigiShield MIDAS Bitcoin limitations Privacy and anonymity Mixing protocols Third-party mixing protocols Inherent anonymity Extended protocols on top of Bitcoin Colored coins Counterparty Development of altcoins Consensus algorithms Hashing algorithms Difficulty adjustment algorithms Inter-block time Block rewards Reward halving rate Block size and transaction size Interest rate Coinage Total supply of coins Namecoin Trading Namecoins Obtaining Namecoins Generating Namecoin records Litecoin Primecoin Trading Primecoin Mining guide Zcash Trading Zcash Mining guide Address generation GPU mining Downloading and compiling nheqminer Initial Coin Offerings (ICOs) ERC20 tokens Summary Smart Contracts History Definition Ricardian contracts Smart contract templates Oracles Smart Oracles Deploying smart contracts on a blockchain The DAO Summary Ethereum 101 Introduction The yellow paper Useful mathematical symbols Ethereum blockchain Ethereum – bird's eye view The Ethereum network Mainnet Testnet Private net Components of the Ethereum ecosystem Keys and addresses Accounts Types of accounts Transactions and messages Contract creation transaction Message call transaction Messages Calls Transaction validation and execution The transaction substate State storage in the Ethereum blockchain The world state The account state Transaction receipts Ether cryptocurrency / tokens (ETC and ETH) The Ethereum Virtual Machine (EVM) Execution environment Machine state The iterator function Smart contracts Native contracts Summary Further Ethereum Programming languages Runtime bytecode Opcodes and their meaning Arithmetic operations Logical operations Cryptographic operations Environmental information Block information Stack, memory, storage, and flow operations Push operations Duplication operations Exchange operations Logging operations System operations Blocks and blockchain The genesis block The block validation mechanism Block finalization Block difficulty Gas Fee schedule Forks in the blockchain Nodes and miners The consensus mechanism Ethash CPU mining GPU mining Benchmarking Mining rigs Mining pools Wallets and client software Geth Eth Pyethapp Parity Light clients Installation Eth installation Mist browser Geth The geth console Funding the account with bitcoin Parity installation Creating accounts using the parity command line APIs, tools, and DApps Applications (DApps and DAOs) developed on Ethereum Tools Supporting protocols Whisper Swarm Scalability, security, and other challenges Trading and investment Summary Ethereum Development Environment Test networks Setting up a private net Network ID The genesis file Data directory Flags and their meaning Static nodes Starting up the private network Running Mist on private net Deploying contracts using Mist Block explorer for private net / local Ethereum block explorer Summary Development Tools and Frameworks Languages Compilers Solidity compiler (solc) Installation on Linux Installation on macOS Integrated Development Environments (IDEs) Remix Tools and libraries Node version 7 EthereumJS Ganache MetaMask Truffle Installation Contract development and deployment Writing Testing Solidity language Types Value types Boolean Integers Address Literals Integer literals String literals Hexadecimal literals Enums Function types Internal functions External functions Reference types Arrays Structs Data location Mappings Global variables Control structures Events  Inheritance Libraries Functions Layout of a Solidity source code file Version pragma Import Comments Summary Introducing Web3 Web3 Contract deployment POST requests The HTML and JavaScript frontend Installing web3.js Example Creating a web3 object Checking availability by calling any web3 method Contract functions Development frameworks Truffle Initializing Truffle Interaction with the contract Another example An example project – Proof of Idea Oracles Deployment on decentralized storage using IPFS Installing IPFS Distributed ledgers Summary Hyperledger Projects under Hyperledger Fabric Sawtooth Lake Iroha Burrow Indy Explorer Cello Composer Quilt Hyperledger as a protocol The reference architecture Requirements and design goals of Hyperledger Fabric The modular approach Privacy and confidentiality Scalability Deterministic transactions Identity Auditability Interoperability Portability Rich data queries Fabric Hyperledger Fabric Membership services Blockchain services Consensus services Distributed ledger The peer to peer protocol Ledger storage Chaincode services Components of the fabric Peers Orderer nodes Clients Channels World state database Transactions Membership Service Provider (MSP) Smart contracts Crypto service provider Applications on blockchain Chaincode implementation The application model Consensus in Hyperledger Fabric The transaction life cycle in Hyperledger Fabric Sawtooth Lake PoET Transaction families Consensus in Sawtooth The development environment – Sawtooth Lake Corda Architecture State objects Transactions Consensus Flows Components Nodes The permissioning service Network map service Notary service Oracle service Transactions Vaults CorDapp The development environment – Corda Summary Alternative Blockchains Blockchains Kadena Ripple Transactions Payments related Order related Account and security-related Interledger Application layer Transport layer Interledger layer Ledger layer Stellar Rootstock Sidechain Drivechain Quorum Transaction manager Crypto Enclave QuorumChain Network manager Tezos Storj MaidSafe BigchainDB MultiChain Tendermint Tendermint Core Tendermint Socket Protocol (TMSP) Platforms and frameworks Eris Summary Blockchain – Outside of Currencies Internet of Things Physical object layer Device layer Network layer Management layer Application layer IoT blockchain experiment First node setup Raspberry Pi node setup Installing Node.js Circuit Government Border control Voting Citizen identification (ID cards) Miscellaneous Health Finance Insurance Post-trade settlement Financial crime prevention Media Summary Scalability and Other Challenges Scalability Network plane Consensus plane Storage plane View plane Block size increase Block interval reduction Invertible Bloom Lookup Tables Sharding State channels Private blockchain Proof of Stake Sidechains Subchains Tree chains (trees) Block propagation Bitcoin-NG Plasma Privacy Indistinguishability Obfuscation Homomorphic encryption Zero-Knowledge Proofs State channels Secure multiparty computation Usage of hardware to provide confidentiality CoinJoin Confidential transactions MimbleWimble Security Smart contract security Formal verification and analysis Oyente tool Summary Current Landscape and What's Next Emerging trends Application-specific blockchains (ASBCs) Enterprise-grade blockchains Private blockchains Start-ups Strong research interest Standardization Enhancements Real-world implementations Consortia Answers to technical challenges Convergence Education of blockchain technology Employment Cryptoeconomics Research in cryptography New programming languages Hardware research and development Research in formal methods and security Alternatives to blockchains Interoperability efforts Blockchain as a Service Efforts to reduce electricity consumption Other challenges Regulation Dark side Blockchain research Smart contracts Centralization issues Limitations in cryptographic functions Consensus algorithms Scalability Code obfuscation Notable projects Zcash on Ethereum CollCo Cello Qtum Bitcoin-NG Solidus Hawk Town-Crier SETLCoin TEEChan Falcon Bletchley Casper Miscellaneous tools Solidity extension for Microsoft Visual Studio MetaMask Stratis Embark DAPPLE Meteor uPort INFURA Convergence with other industries Future Summary Another Book You May Enjoy Leave a review – let other readers know what you think Preface This book has one goal, to introduce theoretical and practical aspects of the blockchain technology.

In addition, we will explore some of the APIs that are available for programming Bitcoin applications. Bitcoin Clients and APIs In this chapter, we provides you with an introduction to Bitcoin client installation and a basic introduction to various APIs and tools that are available for developing Bitcoin applications. We will examine how to set up a Bitcoin node in live and test networks. Also, we will discuss various commands and utilities that are used to perform various functions in Bitcoin system. Bitcoin installation The Bitcoin Core client can be installed from https://bitcoin.org/en/download. This is available for different architectures and platforms ranging from x86 Windows to ARM Linux, as shown in the following screenshot: Download Bitcoin Core Types of Bitcoin Core clients Let's explore the different types of Bitcoin Core clients.

Finally, an introduction to financial markets is also included as there are many interesting use cases for blockchain technology in the financial sector. Chapter 5, Introducing Bitcoin, covers Bitcoin, the first and largest blockchain. It introduces technical concepts related to bitcoin cryptocurrency in detail. Chapter 6, Bitcoin Network and Payments, covers Bitcoin network, relevant protocols and various Bitcoin wallets. Moreover, advanced protocols, Bitcoin trading and payments is also introduced. Chapter 7, Bitcoin Clients and APIs, introduces various Bitcoin clients and programming APIs that can be used to build Bitcoin applications. Chapter 8, Alternative Coins, introduces alternative cryptocurrencies that were introduced after the invention of Bitcoin. It also presents examples of different altcoins, their properties, and how they have been developed and implemented.


pages: 52 words: 13,257

Bitcoin Internals: A Technical Guide to Bitcoin by Chris Clark

bitcoin, fiat currency, peer-to-peer, Satoshi Nakamoto, transaction costs, Turing complete

doi=10.1.1.83.7634 [18] Nick Szabos, "Bit gold," December 27, 2008. http://unenumerated.blogspot.com/2005/12/bit-gold.html [19] "Protocol specification," Bitcoin Wiki, May 5, 2013. https://en.bitcoin.it/wiki/Protocol_specification#Addresses [20] Leslie Lamport, Robert Shostak, Marshall Pease, "The Byzantine Generals Problem," ACM Transactions on Programming Languages and Systems 4 (3) (1982): 382401. http://research.microsoft.com/en-us/um/people/lamport/pubs/byz.pdf [21] "Why was 21 million picked as the number of bitcoins to be created?" Bitcoin Stack Exchange, March 7, 2013. http://bitcoin.stackexchange.com/questions/8439/why-was-21-million-picked-as-the-number-of-bitcoins-to-be-created [22] "Technical background of Bitcoin addresses," Bitcoin Wiki, March 14, 2013. https://en.bitcoin.it/wiki/Technical_background_of_Bitcoin_addresses [23] "Why are Bitcoin addresses hashes of public keys?" Bitcoin Stack Exchange, May 8, 2012. http://bitcoin.stackexchange.com/questions/3600/why-are-bitcoin-addresses-hashes-of-public-keys [24] Raulo, "Optimal pool abuse strategy," February 4, 2011. http://bitcoin.atspace.com/poolcheating.pdf Notes 1Monetary inflation is a sustained increase in the supply of money, which typically results in price inflation.

If you are a business owner and just want to accept bitcoins, you can fill your wallet by publishing a Bitcoin address and requesting that customers send funds to that address. Mining, the means by which bitcoins are initially put into circulation, provides another way of obtaining bitcoins. When mining, you get paid bitcoins to run a computer that processes transactions for the bitcoin network. Mining will be discussed more in Chapter 9. * * * Figure 2.2: The "Receive coins" tab of the Bitcoin-Qt client where you can manage your addresses. * * * 2.3 Sending Payments Once you have bitcoins in your wallet, you will be able to see the balance in your wallet on the Overview tab of the Bitcoin client. You can then use the Bitcoin client to send funds to any other Bitcoin user. All you need is one of their addresses.

Bitcoin Stack Exchange, May 8, 2012. http://bitcoin.stackexchange.com/questions/3600/why-are-bitcoin-addresses-hashes-of-public-keys [24] Raulo, "Optimal pool abuse strategy," February 4, 2011. http://bitcoin.atspace.com/poolcheating.pdf Notes 1Monetary inflation is a sustained increase in the supply of money, which typically results in price inflation. It is a serious risk factor for fiat currencies because governments often produce money excessively, causing perpetual price inflation. 2The creator of Bitcoin defines a bitcoin as a "chain of digital signatures" in the public ledger known as the block chain.[1] 3The Bitcoin source code can be found at https://github.com/bitcoin/bitcoin 4According to the Bitcoin Wiki, the second biggest bitcoin based company is the underground drug website known as the Silk Road.[3] The sales figures were estimated by Carnegie Mellon computer security professor Nicolas Christin.[4] Six of the other businesses in the top 20 largest are gambling related.[3] 5The chart is from bitcoincharts.com 6See https://en.bitcoin.it/wiki/Tor 7These are foreign exchange fees, not Bitcoin transaction fees (which are much smaller). 8There is a 1 in 4.29 billion chance that a mistyped address passes the checksum test.


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The Infinite Machine: How an Army of Crypto-Hackers Is Building the Next Internet With Ethereum by Camila Russo

4chan, Airbnb, algorithmic trading, altcoin, always be closing, Any sufficiently advanced technology is indistinguishable from magic, Asian financial crisis, bitcoin, blockchain, Burning Man, crowdsourcing, cryptocurrency, distributed ledger, diversification, Donald Trump, East Village, Ethereum, ethereum blockchain, Flash crash, Google Glasses, Google Hangouts, hacker house, Internet of things, Mark Zuckerberg, Maui Hawaii, mobile money, new economy, peer-to-peer, Peter Thiel, pets.com, Ponzi scheme, prediction markets, QR code, reserve currency, RFC: Request For Comment, Richard Stallman, Robert Shiller, Robert Shiller, Sand Hill Road, Satoshi Nakamoto, semantic web, sharing economy, side project, Silicon Valley, Skype, slashdot, smart contracts, South of Market, San Francisco, the payments system, too big to fail, tulip mania, Turing complete, Uber for X

Mihai kept the magazine going: “Bittalk Media Ltd Announcement, September 9, 2012,” Bitcoin Magazine, September 9, 2012, https://web.archive.org/web/20120913060903/http://bitcoinmagazine.net/announcement/. 4: The Rabbit Hole 1. at the beginning of the year: Carrie Kirby, “Bitcoin 2013 to Draw 1,000, and the Winklevii, to San Jose This Weekend,” CoinDesk, May 17, 2013, https://www.coindesk.com/bitcoin-2013-to-draw-1000-and-the-winklevii-to-san-jose-this-weekend/. 2. risks and common sense: Enric Duran, “I Have ‘Robbed’ 492000 Euros Whom Most Rob Us in Order to Denounce Them and Build Some Alternatives Society,” Enric Duran (blog), 2008, https://enricduran.cat/en/i-have-robbed-492000-euros-whom-most-rob-us-order-denounce-them-and-build-some-alternatives-society-0/. 5: The Swiss Knife 1. wrote for a Bitcoin Magazine: Vitalik Buterin, “Bitcoin at Porcfest, Part 0: Exploring Boston and New Hampshire,” Bitcoin Magazine, June 15, 2013, https://bitcoinmagazine.com/articles/Bitcoin-at-porcfest-part-0-exploring-boston-and-new-hampshire-1371335040/. 2. strike against them: Vitalik Buterin, “Bitcoiners from Around the World Meet in Amsterdam,” Bitcoin Magazine, September 29, 2013, https://bitcoinmagazine.com/articles/bitcoiners-from-around-the-world-meet-in-amsterdam-1380482873/. 3. exchange (1 BTC for 100 MSC): J. R. Willett, “It’s here: The Second Bitcoin Whitepaper,” BitcoinTalk, January 6, 2012, https://bitcointalk.org/index.php?topic=56901.0. 4. “Anybody can do that”: Digital Magus, “Bitcoin 2013 - Day 2 - Bitcoin in the Future, part 4 of 5,” YouTube, uploaded May 22, 2013, https://www.youtube.com/watch?

“ongoing chain of hash-based proof-of-work”: Satoshi Nakamoto, “Bitcoin P2P E-cash Paper,” Cryptography Mailing List, October 31, 2008, https://satoshi.nakamotoinstitute.org/emails/cryptography/1/#selection-75.18-83.27.18. 4. Satoshi Nakamoto wrote in the paper: Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” 2008, https://bitcoin.org/bitcoin.pdf. 5. “Bitcoin offers a way to fix this”: Vitalik Buterin, reply to “Bitcoin Weekly Looking for Writers,” BitcoinTalk, March 25, 2011, https://bitcointalk.org/index.php?topic=4916.msg72174#msg72174. 3: The Magazine 1. “suddenly crash at any time”: Vitalik Buterin, “Causes Behind the Bitcoin Price Rally,” Bitcoin Weekly, May 15, 2011, https://web.archive.org/web/20130916232908/http://bitcoinweekly.com:80/articles/causes-behind-the-Bitcoin-price-rally. 2. “available payment options”: “The First Issue of Bitcoin Magazine Goes to Print,” Matthew N.

That’s when Vitalik invited him to join the rest of the team in Miami. It was the week before the North American Bitcoin Conference in late January 2014. Aside from his brief meeting with London’s Bitcoin squatters and his recent foray writing code for Ethereum, Gavin hadn’t had any contact with the crypto community. He didn’t own any Bitcoin, a fact he was slightly ashamed of as he greeted the men (and maybe one or two women) at the Miami house. He assumed they all knew each other from Bitcoin parties and Bitcoin startups and had all become Bitcoin rich. Bitcoin was running on its biggest high to date, surging from around $100 at the beginning of 2013 to over $1,000 in November. It had since given up some of those gains and was back at around $600. But many of the people there had first bought Bitcoin when it traded for a few bucks and were feeling rich.


pages: 348 words: 97,277

The Truth Machine: The Blockchain and the Future of Everything by Paul Vigna, Michael J. Casey

3D printing, additive manufacturing, Airbnb, altcoin, Amazon Web Services, barriers to entry, basic income, Berlin Wall, Bernie Madoff, bitcoin, blockchain, blood diamonds, Blythe Masters, business process, buy and hold, carbon footprint, cashless society, cloud computing, computer age, computerized trading, conceptual framework, Credit Default Swap, crowdsourcing, cryptocurrency, cyber-physical system, dematerialisation, disintermediation, distributed ledger, Donald Trump, double entry bookkeeping, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, failed state, fault tolerance, fiat currency, financial innovation, financial intermediation, global supply chain, Hernando de Soto, hive mind, informal economy, intangible asset, Internet of things, Joi Ito, Kickstarter, linked data, litecoin, longitudinal study, Lyft, M-Pesa, Marc Andreessen, market clearing, mobile money, money: store of value / unit of account / medium of exchange, Network effects, off grid, pets.com, prediction markets, pre–internet, price mechanism, profit maximization, profit motive, ransomware, rent-seeking, RFID, ride hailing / ride sharing, Ross Ulbricht, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, smart contracts, smart meter, Snapchat, social web, software is eating the world, supply-chain management, Ted Nelson, the market place, too big to fail, trade route, transaction costs, Travis Kalanick, Turing complete, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, universal basic income, web of trust, zero-sum game

And so, on August 1, just when it seemed that Bitcoin might avert a painful divorce, the split finally happened. On that date, a new version of Bitcoin, calling itself Bitcoin Cash, with a new currency bearing the symbol BCH (compared with bitcoin’s BTC) was launched with an 8MB block capacity. Once a few anti-SegWit miners started mining blocks with those characteristics, the fork was on. It was like a stock split—technically, all holders of bitcoin were entitled both to their original BTC and an equal share of BCH—except that, unlike a stock split, both sides were mutually incompatible. If that idea of equal-but-different money is confusing to you, you’re not alone. It was new to bitcoin exchanges, too. But once some agreed to start trading BCH, the market didn’t seem to know what to do with this new rebel bitcoin. The price initially jumped from an opening near $300 to $700, but then, amid signs that only one major mining outfit was backing it, it dropped back to just above $200 and eventually steadied around $350 over the summer.

Then, out of the creative mind of Bitcoin developer Pieter Wuille: The Segregated Witness proposals and source code can be found at https://github.com/bitcoin/bips/blob/master/bip-0141.mediawiki. It allows people to jointly sign: Joseph Poon and Thaddeus Dryja, “The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments,” January 14, 2016, https://lightning.network/lightning-network-paper.pdf. after lining up with early Bitcoin investor and prominent libertarian Roger Ver: Laura Shin, “Is This Massive Power Struggle About to Blow Up Bitcoin?” Forbes, March 21, 2017, https://www.forbes.com/sites/laurashin/2017/03/21/is-this-massive-power-struggle-about-to-blow-up-bitcoin/#9872e4873250. Barry Silbert came up with the SegWit2x compromise: “Bitcoin Scaling Agreement at Consensus 2017,” Digital Currency Group, Medium, May 23, 2017, https://medium.com/@DCGco/bitcoin-scaling-agreement-at-consensus-2017-133521fe9a77.

Not to be outdone, Bitcoin, the granddaddy of the cryptocurrency world, has continued to reveal strengths—and this has been reflected in its price. Despite a bitter fight between developers and the “miners” that validate transactions on the Bitcoin network, a feud that led the currency to split into two separate coins with different software codes, bitcoin’s price surged to a record high of $11,323 in late November 2017, taking its market capitalization to almost $190 billion according to CoinDesk’s Bitcoin Price Index. That marks a price gain of more than 4,800 percent since The Age of Cryptocurrency was published in January 2015 and a return of almost 19 million percent since bitcoin was first tradable on a semi-liquid exchange in July 2010. If you’d invested $6,000 in bitcoin, you’d be a millionaire right now.


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Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott

Airbnb, altcoin, asset-backed security, autonomous vehicles, barriers to entry, bitcoin, blockchain, Blythe Masters, Bretton Woods, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, cloud computing, cognitive dissonance, commoditize, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, cryptocurrency, disintermediation, disruptive innovation, distributed ledger, Donald Trump, double entry bookkeeping, Edward Snowden, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Galaxy Zoo, George Gilder, glass ceiling, Google bus, Hernando de Soto, income inequality, informal economy, information asymmetry, intangible asset, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, money market fund, Network effects, new economy, Oculus Rift, off grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, QR code, quantitative easing, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, social graph, social intelligence, social software, standardized shipping container, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, TaskRabbit, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, unorthodox policies, wealth creators, X Prize, Y2K, Zipcar

Early adopters have tended to hold on to bitcoin as they hold on to gold, hoping that its value will increase in the long run, and therefore treating bitcoin as an asset rather than as a medium of exchange. According to economic theorists, low or no inflation motivates holders to hoard rather than spend their bitcoin. Still, if more trusted bitcoin exchanges facilitate consumers’ movement in and out of bitcoin, then the frequency and volume of trading could increase. If more merchants accept bitcoin as a medium of payment, then people who’ve been sitting on bitcoins may start to use their store for purchases, thereby freeing up more bitcoins. If merchants begin to issue bitcoin-denominated gift cards, then more people should be exposed to cryptocurrencies and become more comfortable transacting in bitcoin. And so, hypothetically, people will have fewer reasons to hoard bitcoin.

And so, hypothetically, people will have fewer reasons to hoard bitcoin. Advocates of the bitcoin protocol argue that, because bitcoins are divisible to eight decimal places—the smallest unit is called a Satoshi, worth one hundredth of a millionth of a bitcoin—the smallest denominations will buy more if demand for bitcoin increases. There’s also the possibility of tweaking the protocols to allow for greater divisibility, say, picopayments (trillionths of a bitcoin) and to remine stranded bitcoin after a period of dormancy. A fifth dimension is high latency: for the bitcoin blockchain network, the process of clearing and settling transactions takes about ten minutes, which is far faster end to end than most payment mechanisms. But clearing transactions at the point of sale instantaneously is not the issue; the real problem is that ten minutes is simply too long for the Internet of Things where devices need to interact continuously.

Buying Art Through the Bitcoin Blockchain: How It Works To purchase the piece, Don opened his bitcoin wallet app. He used it to create a message that specified the amount of bitcoin representing the purchase price of the piece, designated Artlery’s public key as the recipient of that bitcoin, and used his private key to “sign” or authenticate the message. Don double-checked all the fields because, unlike traditional payment methods, there was no reversing this bitcoin transaction. Then he broadcast the message not to his Canadian bank but to the entire network of computers running the full bitcoin blockchain. Some people refer to these computers as nodes, where some nodes are donating their processing power to solve the math problem associated with creating a block. As we’ve explained, the bitcoin community refers to them as miners and to their problem-solving work as mining, as in gold mining.


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Silk Road by Eileen Ormsby

4chan, bitcoin, blockchain, Brian Krebs, corporate governance, cryptocurrency, Edward Snowden, fiat currency, Firefox, Julian Assange, litecoin, Mark Zuckerberg, Network effects, peer-to-peer, Ponzi scheme, profit motive, Right to Buy, Ross Ulbricht, Satoshi Nakamoto, stealth mode startup, Ted Nelson, trade route, Turing test, web application, WikiLeaks

From 6 February 2011 to 23 July 2013, sales of just over 9.5 million bitcoin brought in commissions of 614,000 bitcoin to Dread Pirate Roberts from 1,229,465 transactions and just under a million registered users. The FBI valued the revenue at $1.2 billion and commissions at $79.8 million, although the former figure, at least, was erroneous and likely significantly less. To arrive at that figure, the FBI had multiplied the number of bitcoin seized by the current exchange rate. But the value of a bitcoin had fluctuated from $0.67 to $214.67 during Silk Road’s lifetime. The rate at the time of calculation was around $126. So if a gram of MDMA was worth a steady $50, purchasing a gram of MDMA in February 2011, when bitcoin reached parity, would have cost 50 bitcoin. The same gram a couple of years later would have cost 0.5 bitcoin. This meant 50.5 bitcoin would have actually been spent to purchase the two grams for $100, but the FBI would have valued it at around $6363.

Finney later wrote that he had been the recipient of the first bitcoin transaction when Nakamoto sent him ten bitcoins. He left his PC running and mining until he turned it off because ‘it made my computer run hot, and the fan noise bothered me’. He then went on to other things until: The next I heard of bitcoin was late 2010, when I was surprised to find that it was not only still going, bitcoins actually had monetary value. I dusted off my old wallet, and was relieved to discover that my bitcoins were still there. As the price climbed up to real money, I transferred the coins into an offline wallet, where hopefully they’ll be worth something to my heirs. Another forum member who participated in discussions with Nakamoto during bitcoin’s infancy, Sepp Hasslberger, said, ‘So, the early adopter finds the worm in this system.’

But it found a niche in the black markets thanks to its ability to be acquired anonymously. A cash deposit could be made into a bitcoin trader’s bank account over the counter of any bank. A reference number on the deposit slip would alert the trader to send the bitcoin to a specific bitcoin address, which had been supplied to the trader by anonymous email. Although Nakamoto’s initial posts had described his vision for an absence of regulation, his later posts remained technical and academic until WikiLeaks began to canvass the viability of accepting bitcoin. Nakamoto was adamant that he did not want his creation associated with the whistleblowing site. ‘No, don’t “bring it on”,’ he wrote. ‘I make this appeal to WikiLeaks not to try to use Bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage.’


Bit by Bit: How P2P Is Freeing the World by Jeffrey Tucker

Affordable Care Act / Obamacare, Airbnb, airport security, altcoin, bank run, bitcoin, blockchain, business cycle, crowdsourcing, cryptocurrency, disintermediation, distributed ledger, Fractional reserve banking, George Gilder, Google Hangouts, informal economy, invisible hand, Kickstarter, litecoin, Lyft, obamacare, Occupy movement, peer-to-peer, peer-to-peer lending, QR code, ride hailing / ride sharing, Ross Ulbricht, Satoshi Nakamoto, sharing economy, Silicon Valley, Skype, TaskRabbit, the payments system, uber lyft

The high fees of credit cards are mostly related to fraud prevention, which is not an issue in the bitcoin world. Again, bitcoin is both a payment network and a currency. It is a completely different method of facilitating exchange than the status quo. Question: Can’t anyone create an unlimited quantity of bitcoins? The number of bitcoins are strictly and severely limited by the protocol. It’s true that bitcoin is an open source protocol, meaning that anyone can copy it but, at the same time, everyone knows who copied it. So you can create bitcoin as an exact copy but it will have no value. The ledger on the canonical system is constantly monitored for its integrity. Maintaining that ledger is not the responsibility of a company. It is the responsibility of the whole community in which anyone can enter. Question: The estimated cap on bitcoin is 21 million. Is this enough bitcoin to go around?

The first posted price of bitcoin appeared on October 5, 2009. On this exchange, $1 equaled 1,309.03 bitcoin (which many considered overpriced at the time). In other words, the first valuation of bitcoin was little more than one-tenth of a penny. Yes, if you had bought $100 worth of bitcoin in those days, and not sold them in some panic, you would be a half-billionaire today. So here is the question: What happened between January 9 and October 5, 2009, to cause bitcoin to obtain a market value? The answer is that traders, enthusiasts, entrepreneurs, and others were trying out the blockchain. They wanted to know if it worked. Did it transfer the units without double-spending? Did a system that depended on voluntary CPU power actually suffice to verify and confirm transactions? Do the rewarded bitcoins land in the right spot as payment for verification services?

It lived as a payment system for 10 months before the currency obtained any market value, and that value was a response to the market’s experience that the payment system was working. Question: Very simply, how does bitcoin work? Answer: Bitcoin depends on a ledger system that exists on the Internet in millions of different copies that reside on any node. The ledger keeps up with property titles to bitcoin, recording public addresses and their movements through exchange using cryptography. Bitcoin has value because of this payment network called the blockchain. Everyone can see the blockchain in operation. There is perfect transparency, even if the identity of the owners are not known. New bitcoins are created through a process called mining, which really amounts to verifying transactions. Question: Is it anonymous? Bitcoin is not anonymous. It is based on pseudonymity. Your public key is recorded forever, and it is up to you whether you want your public key associated with your identity.


pages: 364 words: 99,897

The Industries of the Future by Alec Ross

23andMe, 3D printing, Airbnb, algorithmic trading, AltaVista, Anne Wojcicki, autonomous vehicles, banking crisis, barriers to entry, Bernie Madoff, bioinformatics, bitcoin, blockchain, Brian Krebs, British Empire, business intelligence, call centre, carbon footprint, cloud computing, collaborative consumption, connected car, corporate governance, Credit Default Swap, cryptocurrency, David Brooks, disintermediation, Dissolution of the Soviet Union, distributed ledger, Edward Glaeser, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, fiat currency, future of work, global supply chain, Google X / Alphabet X, industrial robot, Internet of things, invention of the printing press, Jaron Lanier, Jeff Bezos, job automation, John Markoff, Joi Ito, Kickstarter, knowledge economy, knowledge worker, lifelogging, litecoin, M-Pesa, Marc Andreessen, Mark Zuckerberg, Mikhail Gorbachev, mobile money, money: store of value / unit of account / medium of exchange, Nelson Mandela, new economy, offshore financial centre, open economy, Parag Khanna, paypal mafia, peer-to-peer, peer-to-peer lending, personalized medicine, Peter Thiel, precision agriculture, pre–internet, RAND corporation, Ray Kurzweil, recommendation engine, ride hailing / ride sharing, Rubik’s Cube, Satoshi Nakamoto, selective serotonin reuptake inhibitor (SSRI), self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, social graph, software as a service, special economic zone, supply-chain management, supply-chain management software, technoutopianism, The Future of Employment, Travis Kalanick, underbanked, Vernor Vinge, Watson beat the top human players on Jeopardy!, women in the workforce, Y Combinator, young professional

As of the 2014 holiday season: Jillian Kumagai, “More Than 21,000 Retailers Accept Bitcoin Payments,” Mashable, November 15, 2014, http://mashable.com/2014/11/15/bitcoin-retailers-infographic/?utm_cid=mash-com-Tw-main-link; Jon Matonis, “Top 10 Bitcoin Merchant Sites,” Forbes, May 24, 2013, http://www.forbes.com/sites/jonmatonis/2013/05/24/top-10-bitcoin-merchant-sites/; Benzinga, “What Companies Accept Bitcoin?” Nasdaq, February 4, 2014, http://www.nasdaq.com/article/what-companies-accept-bitcoin-cm323438; Jonas Chokun, “Who Accepts Bitcoins?” Bitcoin Values, http://www.bitcoinvalues.net/who-accepts-bitcoins-payment-companies-stores-take-bitcoins.html. On October 31, 2008, a research paper: Benjamin Wallace, “The Rise and Fall of Bitcoin,” Wired, November 23, 2011, http://www.wired.com/magazine/2011/11/mf_bitcoin/. It called for the creation: Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” Bitcoin, November 1, 2008, http://bitcoin.org/bitcoin.pdf.

It called for the creation: Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” Bitcoin, November 1, 2008, http://bitcoin.org/bitcoin.pdf. Banks must be trusted: Joshua Davis, “The Crypto-Currency,” New Yorker, October 10, 2011, http://www.newyorker.com/reporting/2011/10/10/111010fa_fact_davis. The goal is for 21 million: “How Does Bitcoin Work?” Economist, April 11, 2013, http://www.economist.com/blogs/economist-explains/2013/04/economist-explains-how-does-bitcoin-work. At that point, no more: Alice Truong, “Top 10 Bitcoin Myths Debunked,” CoinDesk, June 4, 2013, http://www.coindesk.com/top-10-bitcoin-myths-debunked/. Bitcoin, as a global payment system: Marc Andreessen, “Why Bitcoin Matters,” New York Times, January 21, 2014, http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/?_php=true&_type=blogs&_r=0.

Prominent economist Nouriel Roubini sent out a string of tweets attacking the notion that Bitcoin is a currency. As Roubini tweeted: “Apart from a base 4 criminal activities, Bitcoin is not a currency as it is not a unit of account or a means of payments or store of value.” He went on to explain his rationale in further tweets: “Bitcoin is not a unit of account as no price of goods and services is set in Bitcoin unit nor it ever will. So it isn’t a currency.” “Bitcoin isn’t a store of value as little wealth is in Bitcoin and no assets in it. Also given price volatility it is a lousy store of value.” “Bitcoin isn’t means of payment as few transactions in Bitcoin. And given its volatility all who accept it convert it right back into $/€/¥.” Roubini went even further, calling Bitcoin a scam and a fringe movement: “So Bitcoin isn’t a currency. It is btw a Ponzi game and a conduit for criminal/illegal activities.


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Digital Bank: Strategies for Launching or Becoming a Digital Bank by Chris Skinner

algorithmic trading, AltaVista, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, augmented reality, bank run, Basel III, bitcoin, business cycle, business intelligence, business process, business process outsourcing, buy and hold, call centre, cashless society, clean water, cloud computing, corporate social responsibility, credit crunch, crowdsourcing, cryptocurrency, demand response, disintermediation, don't be evil, en.wikipedia.org, fault tolerance, fiat currency, financial innovation, Google Glasses, high net worth, informal economy, Infrastructure as a Service, Internet of things, Jeff Bezos, Kevin Kelly, Kickstarter, M-Pesa, margin call, mass affluent, MITM: man-in-the-middle, mobile money, Mohammed Bouazizi, new economy, Northern Rock, Occupy movement, Pingit, platform as a service, Ponzi scheme, prediction markets, pre–internet, QR code, quantitative easing, ransomware, reserve currency, RFID, Satoshi Nakamoto, Silicon Valley, smart cities, social intelligence, software as a service, Steve Jobs, strong AI, Stuxnet, trade route, unbanked and underbanked, underbanked, upwardly mobile, We are the 99%, web application, WikiLeaks, Y2K

Nevertheless, I have invested in Bitcoins and suggest you do too, as it is very likely that they will be a major store of value for years to come in the near term. Bitcoin’s timeline[29] 2008–2009 In 2008, Satoshi Nakamoto posted a paper describing the Bitcoin protocol on the internet. In 2009, the Bitcoin network came into existence with the release of the first open source Bitcoin client and the issuance of the first Bitcoins. 2010 The prices for the first Bitcoin transactions were negotiated by individuals on the Bitcointalk forums. One notable transaction involved a 10,000 BTC pizza. On 6 August, a major vulnerability in the Bitcoin protocol was spotted. Transactions weren't properly verified before they were included in the transaction log or "block chain" which allowed for users to bypass Bitcoin's economic restrictions and create an indefinite number of Bitcoins On 15 August, the major vulnerability was exploited.

The most recent attempt to provide a good alternative that gained significant traction is Bitcoin. Bitcoin is a digital currency designed to be controlled through encryption rather than a centralised authority. Operating in exactly the same way as cash, Bitcoins are fully exchangeable as an anonymous form of currency in real-time across the internet and, shortly, at Point-of-Sale. The core features of Bitcoin are that they can be: Sent to anyone with a Bitcoin address; Accessed from anywhere with an Internet connection; Anybody can start buying, selling or accepting Bitcoins regardless of their location; Completely distributed with no bank or payment processor between users (this decentralization is the basis for Bitcoin’s security and freedom); and Transactions are free (for now, this will change). Bitcoin is a fully encrypted, digital currency which, when you have some, can be used globally as easily as cash.

They have capacity for over 10,000 tps to handle the busiest holiday periods where transactions regularly reach 8,500 per second. Bitcoin’s 7 tps compared to 10,000 with VISA is a bit of a chasm, although Bitcoin would not claim to be a VISA. They do compare their targets to PayPal. PayPal handles around 4 million transactions per day for an average of 46 tps or a peak rate of around 100 tps. That’s what Bitcoin is aiming for, and the open source community do say that if Bitcoin usage increases such that they need to take the false 7 tps constraint away, then that is easily achieved. Maybe that’s why the value of Bitcoins is rising and rising fast. The 2013 Bitcoin bubble and burst The Bitcoin phenomena really hit the headlines in 2013, when the value of Bitcoins rose from a steady $20 per coin to $266 in just a few months, only to crash to $100 by the end of April.


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Whiplash: How to Survive Our Faster Future by Joi Ito, Jeff Howe

3D printing, Albert Michelson, Amazon Web Services, artificial general intelligence, basic income, Bernie Sanders, bitcoin, Black Swan, blockchain, Burning Man, buy low sell high, Claude Shannon: information theory, cloud computing, Computer Numeric Control, conceptual framework, crowdsourcing, cryptocurrency, data acquisition, disruptive innovation, Donald Trump, double helix, Edward Snowden, Elon Musk, Ferguson, Missouri, fiat currency, financial innovation, Flash crash, frictionless, game design, Gerolamo Cardano, informal economy, interchangeable parts, Internet Archive, Internet of things, Isaac Newton, Jeff Bezos, John Harrison: Longitude, Joi Ito, Khan Academy, Kickstarter, Mark Zuckerberg, microbiome, Nate Silver, Network effects, neurotypical, Oculus Rift, pattern recognition, peer-to-peer, pirate software, pre–internet, prisoner's dilemma, Productivity paradox, race to the bottom, RAND corporation, random walk, Ray Kurzweil, Ronald Coase, Ross Ulbricht, Satoshi Nakamoto, self-driving car, SETI@home, side project, Silicon Valley, Silicon Valley startup, Simon Singh, Singularitarianism, Skype, slashdot, smart contracts, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, Stuxnet, supply-chain management, technological singularity, technoutopianism, The Nature of the Firm, the scientific method, The Signal and the Noise by Nate Silver, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas Kuhn: the structure of scientific revolutions, universal basic income, unpaid internship, uranium enrichment, urban planning, WikiLeaks

(It’s worth noting that Andresen himself had his commit access—his ability to make changes to the Bitcoin Core source code—revoked in May 2016.)12 Even as Satoshi’s presence began to fade, other members of the Bitcoin community were building an infrastructure around the cryptocurrency. New Liberty Standard established an exchange rate in October 2009 (1,309.03 bitcoins to the dollar, based on the cost of the electricity needed to mine bitcoins at the time).13 In February 2010, the Bitcoin Market became the first Bitcoin currency exchange—a place where bitcoins could be purchased with fiat currencies, or converted into more traditional forms of money. May 2010 saw the first real-world Bitcoin transaction, when Laszlo Hanyecz of Jacksonville, Florida, offered 10,000 BTC for two pizzas. Though the price seemed reasonable at the time, amounting to about $25, the same 10,000 bitcoins would have been worth more than $2 million in early 2015.14 That pizza purchase came the same year as the rise of the most famous, or infamous, Bitcoin exchange—Mt.

In late 2014, one of those operations comprised six sites in China that collectively produce eight petahashes of computation per second, creating 4,050 bitcoins per month. It’s an indicator of how large the bitcoin market has grown that this massive effort claimed only 3 percent of global bitcoin mining operations.21 In fact, as this book went to press, Bitcoin underwent its second halving—meaning that the number of bitcoins generated per second decreased by one-half. Just before the first halving, a bitcoin was valued at around twelve dollars. Within a few months, it jumped in price by more than an order of magnitude. Before the halving occurred, there were any number of theories about what would happen—speculators anticipate a sudden spike spurred by smaller supply; game theorists feared that miners would fight for the last higher-rewarded block, or shut their machines off entirely; and many users, blissfully unaware of Bitcoin’s economic policy, had no expectations at all.

Gox soon obtained a license from the Financial Crimes Enforcement Network (FinCEN), which regulates money services business in the United States, its ability to transfer money to customers in the United States was severely restricted.19 In late February, Karpelès resigned from the board of the Bitcoin Foundation, the Mt. Gox website went offline, and the company filed for bankruptcy protection in the United States and Japan.20 In its filings, it claimed to have lost nearly 750,000 bitcoins belonging to its customers, as well as 100,000 bitcoins of its own. Although it later found about 200,000 bitcoins in “an old-format wallet which was used prior to June 2011,” approximately one-twentieth of the total bitcoins in existence at the time had simply disappeared.21 The bitcoin market reacted much as traditional financial markets once responded to the loss of ships carrying gold from the New World to the Old—the price of bitcoins fell, and a series of lawsuits and critical think pieces followed. Mt. Gox issued a statement suggesting that hackers were to blame.


pages: 302 words: 95,965

How to Be the Startup Hero: A Guide and Textbook for Entrepreneurs and Aspiring Entrepreneurs by Tim Draper

3D printing, Airbnb, Apple's 1984 Super Bowl advert, augmented reality, autonomous vehicles, basic income, Berlin Wall, bitcoin, blockchain, Buckminster Fuller, business climate, carried interest, connected car, crowdsourcing, cryptocurrency, Deng Xiaoping, discounted cash flows, disintermediation, Donald Trump, Elon Musk, Ethereum, ethereum blockchain, family office, fiat currency, frictionless, frictionless market, high net worth, hiring and firing, Jeff Bezos, Kickstarter, low earth orbit, Lyft, Mahatma Gandhi, Mark Zuckerberg, Menlo Park, Metcalfe's law, Metcalfe’s law, Mikhail Gorbachev, Minecraft, Moneyball by Michael Lewis explains big data, Nelson Mandela, Network effects, peer-to-peer, Peter Thiel, pez dispenser, Ralph Waldo Emerson, risk tolerance, Robert Metcalfe, Ronald Reagan, Rosa Parks, Sand Hill Road, school choice, school vouchers, self-driving car, sharing economy, short selling, Silicon Valley, Skype, smart contracts, Snapchat, sovereign wealth fund, stealth mode startup, stem cell, Steve Jobs, Tesla Model S, Uber for X, uber lyft, universal basic income, women in the workforce, Y Combinator, zero-sum game

Then two things happened that made what should have been about 40,000 Bitcoins disappear. First, the mining chip was delayed. Rather than shipping it to Peter as ordered, Butterfly Labs used the chip to mine Bitcoins for themselves. They mined Bitcoins for months before shipping the chips to Peter, and during that time, more Bitcoin miners entered the field, so it became rarer for any individual miner to find Bitcoin. By the time Peter received the ASIC chip, we had lost our window of opportunity. And if all this mining competition weren’t enough, Peter stored the Bitcoin he did mine in a wallet controlled by Mt. Gox, which Mt. Gox “lost.” Ironically, my interest in Bitcoin accelerated when I heard that someone associated with Mt. Gox had absconded with about $460 million worth of Bitcoin, including some of the Bitcoin Peter had stored for me.

But it wasn’t until 2011 when I discovered Bitcoin. Bitcoin was a new currency. One that could be used to store value and pay for anything, not just for advancement in a video game. It was a little retro in that it was set up as a marketplace where “miners” would have to “dig” for Bitcoin. They would do it by solving complex algorithms with their computers. Miners got their computers to run simulations that could help them mine Bitcoins faster. Once found, they could be stored in a “wallet” and then spent as needed. There was a decreasing number of Bitcoins made available to be mined over time (the so-called halving), so it was likely that the price of a Bitcoin would increase in value as fewer Bitcoins were mined and its usage increased. The system was set up so that only 21 million Bitcoins would ever be created, so people would not have to worry about their Bitcoin losing value due to “overprinting,” a practice that many governments have engaged in that lowers their currencies’ values and causes inflation.

He was the first investor in Coinbase, which would go on to dominate the retail use of Bitcoin. He also brought together about 40 companies over two sessions, or “tribes,” all dedicated to working with, innovating around, mining and trading Bitcoin. Joel Yarmon first introduced me to Bitcoin when he brought in Peter Vincennes and his company Coinlab to pitch us. Coinlab would become a Bitcoin-focused innovator and miner. It seemed a little out there, but I liked it and we made a small investment in the company. Then I asked Peter if I could buy $250,000 worth of Bitcoin. The price was around $6 per Bitcoin. He bought some and stored them in Mt. Gox, the largest (at that time) Bitcoin exchange. He said he would take some money and buy an ASIC, a high-speed mining chip from Butterfly Labs to get us even cheaper Bitcoin. Then two things happened that made what should have been about 40,000 Bitcoins disappear.


pages: 410 words: 119,823

Radical Technologies: The Design of Everyday Life by Adam Greenfield

3D printing, Airbnb, augmented reality, autonomous vehicles, bank run, barriers to entry, basic income, bitcoin, blockchain, business intelligence, business process, call centre, cellular automata, centralized clearinghouse, centre right, Chuck Templeton: OpenTable:, cloud computing, collective bargaining, combinatorial explosion, Computer Numeric Control, computer vision, Conway's Game of Life, cryptocurrency, David Graeber, dematerialisation, digital map, disruptive innovation, distributed ledger, drone strike, Elon Musk, Ethereum, ethereum blockchain, facts on the ground, fiat currency, global supply chain, global village, Google Glasses, IBM and the Holocaust, industrial robot, informal economy, information retrieval, Internet of things, James Watt: steam engine, Jane Jacobs, Jeff Bezos, job automation, John Conway, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Kevin Kelly, Kickstarter, late capitalism, license plate recognition, lifelogging, M-Pesa, Mark Zuckerberg, means of production, megacity, megastructure, minimum viable product, money: store of value / unit of account / medium of exchange, natural language processing, Network effects, New Urbanism, Occupy movement, Oculus Rift, Pareto efficiency, pattern recognition, Pearl River Delta, performance metric, Peter Eisenman, Peter Thiel, planetary scale, Ponzi scheme, post scarcity, post-work, RAND corporation, recommendation engine, RFID, rolodex, Satoshi Nakamoto, self-driving car, sentiment analysis, shareholder value, sharing economy, Silicon Valley, smart cities, smart contracts, social intelligence, sorting algorithm, special economic zone, speech recognition, stakhanovite, statistical model, stem cell, technoutopianism, Tesla Model S, the built environment, The Death and Life of Great American Cities, The Future of Employment, transaction costs, Uber for X, undersea cable, universal basic income, urban planning, urban sprawl, Whole Earth Review, WikiLeaks, women in the workforce

Visa has been around, in one form or another, since 1958; if besting a completely unknown competitor by a mere factor of 3,000 is all that it has to show for its half-century head start, that doesn’t strike me as saying a great deal. 19.Zack Whittaker, “Hackers can remotely steal fingerprints from Android phones,” ZDNet, August 5, 2015. 20.Fergal Reid and Martin Harrigan, “Bitcoin Is Not Anonymous,” An Analysis of Anonymity in the Bitcoin System (blog), September 30, 2011, anonymity-in-bitcoin.blogspot.co.uk/2011/07/bitcoin-is-not-anonymous.html. 21.Bitcoin Project. “Protect your privacy,” undated, bitcoin.org/en/protect-your-privacy. 22.An additional complication has to do with the distinction between ASICs and general-purpose computing engines. Unlike the processors in smartphones, tablets, laptops or desktop machines, by definition, an ASIC-based mining rig is optimized for one and only one task: mining Bitcoin. When its utility in this role is at an end, it is useless for anything else. Such devices have among the shortest utilization cycles of any commercial information-processing hardware, at significant environmental cost. 23.See en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power. 24.Charles H.

London: Penguin, 2008. p. 82 et seq. 5Cryptocurrency 1.It’s important to note that blockchain operations aren’t really distributed in the sense generally meant by “distributed computation,” in which different chunks of a large problem are farmed out to a network of independent processors, and later annealed. The Bitcoin blockchain, by contrast, is replicated identically across all of the network’s nodes. The trade-off is that all of these copies are verifiably identical with one another, at the cost of other advantages of true distributed processing, chiefly speed. 2.As is customary among Bitcoin enthusiasts, in what follows I’ll simply refer to this party—whatever their actual number, gender or nationality—as a presumptively Japanese, presumptively male individual named Satoshi. 3.Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” October 31, 2008, Bitcoin.org/bitcoin.pdf. 4.Very carefully. Joshua Davis notes, in an article for the New Yorker, that the highly regarded security consultant Dan Kaminsky made strenuous efforts to attack the Bitcoin codebase, and found his gambits anticipated and countered at every turn.

“Banking Blockade,” June 28, 2011, wikileaks.org/Banking-Blockade.html. 7.Hashcash, hashcash.org. 8.David Chaum, “Blind Signatures for Untraceable Payments,” Advances in Cryptology Proceedings of Crypto 82, 1983, pp. 199–203. 9.See Dolartoday, dolartoday.com/indicadores/. 10.In practice, this is not a trivial undertaking. By February 2016, the full Bitcoin blockchain had grown to the point that it weighed in at some 60GB; it took almost a full day for me to download, at typical residential data-transmission speeds, and occupied more or less the entire memory my laptop had available. 11.Bitcoin Project. “Some things you need to know,” undated, bitcoin.org/en/you-need-to-know. 12.My account here is deeply indebted to Chris Pacia’s tutorial, which despite the rather patronizing title is the only one of many Bitcoin explainers I’ve come across that explores this stage of the process in such detail, chrispacia.wordpress.com/2013/09/02/bitcoin-mining-explained-like-youre-five-part-1-incentives/. 13.Among the Bitcoin community, the collapse of the Mt Gox exchange is legendary. See Yessi Bello Perez, “Mt Gox: History of a Failed Bitcoin Exchange,” CoinDesk, August 4, 2015. 14.Jose Pagliery, “The Tipping Point of Bitcoin Micropayments,” CoinDesk, November 15, 2014. 15.Gulliver, “Booking flights with Bitcoin: Taking off,” Economist, February 26, 2015. 16.http://usebitcoins.info/. 17.Pete Rizzo, “Is Bitcoin’s Merchant Appeal Fading?


pages: 267 words: 82,580

The Dark Net by Jamie Bartlett

3D printing, 4chan, bitcoin, blockchain, brain emulation, carbon footprint, creative destruction, crowdsourcing, cryptocurrency, deindustrialization, Edward Snowden, Filter Bubble, Francis Fukuyama: the end of history, global village, Google Chrome, Howard Rheingold, Internet of things, invention of writing, Johann Wolfgang von Goethe, Julian Assange, Kuwabatake Sanjuro: assassination market, life extension, litecoin, longitudinal study, Mark Zuckerberg, Marshall McLuhan, moral hazard, moral panic, Occupy movement, pre–internet, Ray Kurzweil, Ross Ulbricht, Satoshi Nakamoto, Skype, slashdot, technological singularity, technoutopianism, Ted Kaczynski, The Coming Technological Singularity, Turing test, Vernor Vinge, WikiLeaks, Zimmermann PGP

No one person or group is in charge of Bitcoin: everyone is. Bitcoin was introduced to the world in 2009 via a public post on an exclusive emailing list for cryptographers. It quickly developed a following, and soon became the currency of choice for the online drugs market Silk Road. A growing number of people started to exchange Bitcoin for dollars, which pushed its exchange rate from under $0.001 in October 2009 to $100 in April 2013. In October that year, a US Federal Reserve spokesman hinted that Bitcoin might one day become a ‘viable currency’, and the following month the value of a single Bitcoin jumped to over $1,000. Millions of dollars’ worth of Bitcoin are now traded every day. In some parts of the world you can live almost entirely on Bitcoin. Bitcoin’s dramatic rise to prominence resulted in an explosion of investment, exchange companies, and even ATM machines.

Although Amir’s technical know-how and experience are admired, his ideals and motivations have put him on the fringes of what has become an increasingly respectable Bitcoin community. Dark Wallet has pitted itself directly against organisations seeking to capitalise and control Bitcoin and its market. ‘Many prominent Bitcoin developers are actively in collusion with members of law enforcement and seeking approval from government legislators,’ reads the Dark Wallet blurb. ‘We believe this is not in Bitcoin users’ self-interest, and instead serves wealthy business interests that make up the self-titled Bitcoin Foundation.’ In a 2014 interview with Newsweek, the chief Bitcoin Foundation scientist, Gavin Andresen, said that he thinks of Bitcoin as ‘a just-plain-better, more efficient, less-subject-to-political-whims money. Not as an all-powerful black-market tool that will be used by anarchists to overthrow the System.’

He is frequently offered lucrative jobs in the tech sector, but lives instead in what he calls a ‘techno-industrial colony’ in Calafou, Spain. He’s been working on Bitcoin software day and night for over four years now, and arguably knows more about this strange new currency than almost anyone else alive. He is here to tell us about his latest Bitcoin project – something he calls the ‘Dark Wallet’. The reason Amir and so many others like him are excited by Bitcoin is that it’s a form of internet money with potentially far-reaching consequences. A Bitcoin is nothing more than a unique string of numbers. It has no independent value, and is not tied to any real-world currency. Its strength and value come from the fact that people believe in it and use it. Anyone can download a Bitcoin wallet on to their computer, buy Bitcoins with traditional currency from a currency exchange, and use them to buy or sell a growing number of products or services as easily as sending an email.


pages: 611 words: 130,419

Narrative Economics: How Stories Go Viral and Drive Major Economic Events by Robert J. Shiller

agricultural Revolution, Albert Einstein, algorithmic trading, Andrei Shleifer, autonomous vehicles, bank run, banking crisis, basic income, bitcoin, blockchain, business cycle, butterfly effect, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, central bank independence, collective bargaining, computerized trading, corporate raider, correlation does not imply causation, cryptocurrency, Daniel Kahneman / Amos Tversky, debt deflation, disintermediation, Donald Trump, Edmond Halley, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, full employment, George Akerlof, germ theory of disease, German hyperinflation, Gunnar Myrdal, Gödel, Escher, Bach, Hacker Ethic, implied volatility, income inequality, inflation targeting, invention of radio, invention of the telegraph, Jean Tirole, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, litecoin, market bubble, money market fund, moral hazard, Northern Rock, nudge unit, Own Your Own Home, Paul Samuelson, Philip Mirowski, plutocrats, Plutocrats, Ponzi scheme, publish or perish, random walk, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, Rubik’s Cube, Satoshi Nakamoto, secular stagnation, shareholder value, Silicon Valley, speech recognition, Steve Jobs, Steven Pinker, stochastic process, stocks for the long run, superstar cities, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, traveling salesman, trickle-down economics, tulip mania, universal basic income, Watson beat the top human players on Jeopardy!, We are the 99%, yellow journalism, yield curve, Yom Kippur War

Often, detractors describe the valuation of Bitcoin as nothing more than a speculative bubble. Legendary investor Warren Buffett said, “It’s a gambling device.”1 Critics find its story similar to the famous tulip mania narrative in the Netherlands in the 1630s, when speculators drove up the price of tulip bulbs to such heights that one bulb was worth about as much as a house. That is, Bitcoins have value today because of public excitement. For Bitcoin to achieve its spectacular success, people had to become excited enough by the Bitcoin phenomenon to take action to seek out unusual exchanges to buy them. For Bitcoin’s advocates, labeling Bitcoin as a speculative bubble is the ultimate insult. Bitcoin’s supporters often point out that public support for Bitcoin is not fundamentally different from public support for many other things.

A desire to be on the finance side of the tech business, where Bitcoin sits, is popular because there are so many stories illustrating that financiers take control of things. Bitcoin enthusiasts may think that experimenting with Bitcoin will put them in touch with the people who are going to be winners in the new world, will give them insight about how to stay in (or gain) control. It is easy to jump-start one’s connection to this new reality by buying some Bitcoin. Best of all, one doesn’t have to understand Bitcoin to buy it. Vending machines at convenience stores now sell Bitcoins and other cryptocurrencies. This “Be a part of the future” narrative, enhanced by regular news of exciting fluctuations in the price of Bitcoins, gives them value. It generates fluctuations in Bitcoin prices in terms of national currencies, and these fluctuations thrive on and produce contagious narratives.

A “Professor Laughlin, head of the school of political economy in the Chicago University,” a real person with fictional lines in the book, tries to embarrass young Coin by questioning him about the facts of the gold standard, but young Coin proves that he knows the facts even better than Professor Laughlin does.10 In Harvey’s book, we see one of the key elements in the contagion of the bimetallism narrative: a good story about an intelligent young man who gets the better of snooty intellectuals and professionals. Bimetallism and Bitcoin The enthusiasm for bimetallism in the nineteenth century seems similar to the excitement for Bitcoin we have seen in recent years. Among my students at Yale, some seem passionate about Bitcoin, and others appear extremely intrigued when I bring up Bitcoin. Maybe part of the appeal is that understanding Bitcoin requires some effort and talent. There is an air of mystery around Bitcoin, just as there is with conventional money. Few people understand how paper money gets its value and sustains it either. As we noted in chapter 1, there is a detective-story-like mystery about Bitcoin, aided by the narrative that it was invented by Satoshi Nakamoto, who might be a multibillionaire as a result of his Bitcoin holdings. However, no one has ever found him or confirmed his existence.


pages: 472 words: 117,093

Machine, Platform, Crowd: Harnessing Our Digital Future by Andrew McAfee, Erik Brynjolfsson

"Robert Solow", 3D printing, additive manufacturing, AI winter, Airbnb, airline deregulation, airport security, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, artificial general intelligence, augmented reality, autonomous vehicles, backtesting, barriers to entry, bitcoin, blockchain, British Empire, business cycle, business process, carbon footprint, Cass Sunstein, centralized clearinghouse, Chris Urmson, cloud computing, cognitive bias, commoditize, complexity theory, computer age, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, Dean Kamen, discovery of DNA, disintermediation, disruptive innovation, distributed ledger, double helix, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ethereum, ethereum blockchain, everywhere but in the productivity statistics, family office, fiat currency, financial innovation, George Akerlof, global supply chain, Hernando de Soto, hive mind, information asymmetry, Internet of things, inventory management, iterative process, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, joint-stock company, Joseph Schumpeter, Kickstarter, law of one price, longitudinal study, Lyft, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, Marc Andreessen, Mark Zuckerberg, meta analysis, meta-analysis, Mitch Kapor, moral hazard, multi-sided market, Myron Scholes, natural language processing, Network effects, new economy, Norbert Wiener, Oculus Rift, PageRank, pattern recognition, peer-to-peer lending, performance metric, plutocrats, Plutocrats, precision agriculture, prediction markets, pre–internet, price stability, principal–agent problem, Ray Kurzweil, Renaissance Technologies, Richard Stallman, ride hailing / ride sharing, risk tolerance, Ronald Coase, Satoshi Nakamoto, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, speech recognition, statistical model, Steve Ballmer, Steve Jobs, Steven Pinker, supply-chain management, TaskRabbit, Ted Nelson, The Market for Lemons, The Nature of the Firm, Thomas Davenport, Thomas L Friedman, too big to fail, transaction costs, transportation-network company, traveling salesman, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, ubercab, Watson beat the top human players on Jeopardy!, winner-take-all economy, yield management, zero day

Chapter 12 THE DREAM OF DECENTRALIZING ALL THE THINGS 278 “practical men, who believe themselves”: John Maynard Keynes, The General Theory of Employment, Interest, and Money (London: Palgrave Macmillan, 1936), 383–84. 278 “Indeed,” Keynes wrote: Ibid. 279 On October 31, 2008: Paul Vigna and Michael J. Casey, The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order (New York: St. Martin’s Press, 2015), 41. 279 a short paper titled “Bitcoin”: Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” October 31, 2008, https://bitcoin.org/bitcoin.pdf. 283 “the steady addition of a constant amount”: Ibid. 285 Laszlo Hanyecz: Bitcoinwhoswho, “A Living Currency: An Interview with ‘Jercos,’ Party to First Bitcoin Pizza Transaction,” Bitcoin Who’s Who (blog), January 30, 2016, http://bitcoinwhoswho.com/blog/2016/01/30/a-living-currency-an-interview-with-jercos-party-to-first-bitcoin-pizza-transaction. 286 Mt. Gox, a Tokyo-based firm: Yessi Bello Perez, “Mt Gox: The History of a Failed Bitcoin Exchange,” CoinDesk, August 4, 2015, http://www.coindesk.com/mt-gox-the-history-of-a-failed-bitcoin-exchange. 286 that the exchange “had weaknesses” in its system and that “bitcoins vanished”: Robert McMillan, “The Inside Story of Mt.

Spode, “The Great Cryptocurrency Heist,” Aeon, February 14, 2017, https://aeon.co/essays/trust-the-inside-story-of-the-rise-and-fall-of-ethereum. 305 “In [minority members’] view”: Ibid. 305 “Ethereum Classic”: Ibid. 306 “The Resolution of the Bitcoin Experiment”: Mike Hearn, “The Resolution of the Bitcoin Experiment,” Mike’s blog, January 14, 2016, https://blog.plan99.net/the-resolution-of-the-bitcoin-experiment-dabb30201f7#.rvh0ditgj. 306 “It has failed because the community has failed”: Ibid. 306 the performance of the Bitcoin system suffered: Daniel Palmer, “Scalability Debate Continues as Bitcoin XT Proposal Stalls,” CoinDesk, January 11, 2016, http://www.coindesk.com/scalability-debate-bitcoin-xt-proposal-stalls. 306 Chinese exchanges accounted for 42%: Nathaniel Popper, “How China Took Center Stage in Bitcoin’s Civil War,” New York Times, June 29, 2016, https://www.nytimes.com/2016/07/03/business/dealbook/bitcoin-china.html. 306 an estimated 70% of all Bitcoin-mining gear: Danny Vincent, “We Looked inside a Secret Chinese Bitcoin Mine,” BBC News, May 4, 2016, http://www.bbc.com/future/story/20160504-we-looked-inside-a-secret-chinese-bitcoin-mine. 308 “a kid in Africa with a smartphone”: Brandon Griggs, “Futurist: We’ll Someday Accept Computers as Human,” CNN, March 12, 2012, http://www.cnn.com/2012/03/12/tech/innovation/ray-kurzweil-sxsw. 309 “The Nature of the Firm”: R.

Gox, a Tokyo-based firm: Yessi Bello Perez, “Mt Gox: The History of a Failed Bitcoin Exchange,” CoinDesk, August 4, 2015, http://www.coindesk.com/mt-gox-the-history-of-a-failed-bitcoin-exchange. 286 that the exchange “had weaknesses” in its system and that “bitcoins vanished”: Robert McMillan, “The Inside Story of Mt. Gox, Bitcoin’s $460 Million Disaster,” Wired, March 3, 2014, https://www.wired.com/2014/03/bitcoin-exchange. 286 approximately $470 million in Bitcoins: Robin Sidel, Eleanor Warnock, and Takashi Mochizuki, “Almost Half a Billion Worth of Bitcoins Vanish,” Wall Street Journal, February 28, 2014, https://www.wsj.com/news/article_email/SB10001424052702303801304579410010379087576. 286 $27 million in cash: Jake Adelstein and Nathalie-Kyoko Stucky, “Behind the Biggest Bitcoin Heist in History: Inside the Implosion of Mt. Gox,” Daily Beast, May 19, 2016, http://www.thedailybeast.com/articles/2016/05/19/behind-the-biggest-bitcoin-heist-in-history-inside-the-implosion-of-mt-gox.html. 287 By January 2015 the processing capability: Michael J.


pages: 161 words: 44,488

The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology by William Mougayar

Airbnb, airport security, Albert Einstein, altcoin, Amazon Web Services, bitcoin, Black Swan, blockchain, business process, centralized clearinghouse, Clayton Christensen, cloud computing, cryptocurrency, disintermediation, distributed ledger, Edward Snowden, en.wikipedia.org, Ethereum, ethereum blockchain, fault tolerance, fiat currency, fixed income, global value chain, Innovator's Dilemma, Internet of things, Kevin Kelly, Kickstarter, market clearing, Network effects, new economy, peer-to-peer, peer-to-peer lending, prediction markets, pull request, QR code, ride hailing / ride sharing, Satoshi Nakamoto, sharing economy, smart contracts, social web, software as a service, too big to fail, Turing complete, web application

On a cold early January 2014 evening, Vitalik came down the stairs at Bitcoin Decentral in an old narrow building on Spadina Avenue, an hour prior to the start of one of the weekly Toronto Bitcoin Meetups, organized by Anthony Di lorio. I spoke to him for the first time, trying to understand something that was described to me, as “beyond Bitcoin.” For six months prior to that, I had been trying to understand Bitcoin, and this Ethereum technology was news to me. Soon after my conversation started, the room was filling with people entering the building, ready for the Meetup to start. There was a special buzz around because Vitalik had just published his white paper1 on a new blockchain platform that was supposed to be better than Bitcoin, and destined to become the next big thing. Curious and intrigued, I proceeded to bombard Vitalik with questions about Ethereum and its architecture.

Cryptographic proof is the trusted method that blockchains utilize to confirm the validity and finality of transactions between parties. The blockchain will redefine the role of existing intermediaries (if they accept to change), while creating new intermediaries, therefore it will disrupt the traditional boundaries of value. The blockchain has ten characteristics, and they all need to be understood in a holistic manner. NOTES 1. Bitcoin: A Peer-to-Peer Electronic Cash System, https://bitcoin.org/en/bitcoin-paper. 2. Bitcoin “maximalism” refers to the opinion that solely supports Bitcoin at the expense of all other blockchain or cryptocurrency related projects, because maximalists believe we only a need a single blockchain, and single currency in order to achieve desired network effects benefits. 3. The Untapped Potential of Corporate Narratives. http://edgeperspectives.typepad.com/edge_perspectives/2013/10/the-untapped-potential-of-corporate-narratives.html. 4.

Banks should not only see the blockchain as a cost savings lever. It is very much about finding new opportunities that can grow their top line. WHY CAN'T THERE BE A GLOBAL BANK? To a skeptic, it sounds like a rhetorical question, given that Bitcoin was destined to become the underpinning nerve for a new type of global financial system that is borderless. Bitcoin’s vision is a globally decentralized money network with users at the edges of it. We should ask the question—since Bitcoin is global and universal, why is not there a truly global Bitcoin bank? This is a tricky question, because Bitcoin’s philosophy is about decentralization, whereas a bank is everything about centrally managed relationships. However, a global bank with no restrictions on borders or transactions would be interesting to users that want to conduct global transactions wherever they are in the world with the same ease as using a credit card.


pages: 275 words: 84,980

Before Babylon, Beyond Bitcoin: From Money That We Understand to Money That Understands Us (Perspectives) by David Birch

agricultural Revolution, Airbnb, bank run, banks create money, bitcoin, blockchain, Bretton Woods, British Empire, Broken windows theory, Burning Man, business cycle, capital controls, cashless society, Clayton Christensen, clockwork universe, creative destruction, credit crunch, cross-subsidies, crowdsourcing, cryptocurrency, David Graeber, dematerialisation, Diane Coyle, disruptive innovation, distributed ledger, double entry bookkeeping, Ethereum, ethereum blockchain, facts on the ground, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, index card, informal economy, Internet of things, invention of the printing press, invention of the telegraph, invention of the telephone, invisible hand, Irish bank strikes, Isaac Newton, Jane Jacobs, Kenneth Rogoff, knowledge economy, Kuwabatake Sanjuro: assassination market, large denomination, M-Pesa, market clearing, market fundamentalism, Marshall McLuhan, Martin Wolf, mobile money, money: store of value / unit of account / medium of exchange, new economy, Northern Rock, Pingit, prediction markets, price stability, QR code, quantitative easing, railway mania, Ralph Waldo Emerson, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social graph, special drawing rights, technoutopianism, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, wage slave, Washington Consensus, wikimedia commons

Whether this is true or not, there is no clear evidence that Bitcoin (despite the media attention) is being used at all. While the public debate around Bitcoin has, from the earliest time, focused on the supposed anonymity of the payment system and therefore its use for black market purchases (Greenberg 2011), detailed analysis of data from the Bitcoin system by the Federal Reserve has shown that it has barely been used at all for payments for goods and services (let alone for guns and drugs), and further that the pattern of circulation of Bitcoins and the dynamics of the exchange rate are consistent with low usage of Bitcoin for retail transactions (Badev and Chen 2014). Despite the widespread interest, Bitcoins do not seem to be gaining much traction in the ‘real world’ of payments. Wait? Bitcoin? Bitcoin is a decentralized, peer-to-peer means of exchange.

To return to Mervyn King’s point about money being a ‘particular historical institution’ (King 2016b), there is no reason why money should continue to work the way it does in response to continuing technological change, and no reasonable person would expect it to. Is Bitcoin the future of money? If Bitcoin is not money now, might it be the future of money? I think not: Bitcoin is not the future of money, and the future of money is not Bitcoin. Why the interest then? A reasonable conjecture is that the interest in Bitcoin points to a latent demand for change and, usefully, generates and focuses debate about current monetary structures (Jansen 2013). Much of the interest isn’t, therefore, specifically in Bitcoin, to my mind, but rather in the feasibility of an alternative to the state-issued, interest-bearing fiat currency money system that has been in place for the last forty years. If that interest helps to facilitate debate about what society wants from money in the future, that is very helpful, but it does not imply that Bitcoin satisfies whatever requirements might emerge from that process.

Bitcoin is a decentralized, peer-to-peer means of exchange. If you have a Bitcoin, which is just a string of numbers, you can send that Bitcoin (or a subdivision of it) to anyone else. (If you want to understand how Bitcoin works, a good place to start is the original paper on the topic: ‘Bitcoin: a peer-to-peer electronic cash system’ by ‘Satoshi Nakamoto’.) I’m no expert on cryptography but there’s no reason I know of to question the basic idea: use a computationally difficult challenge to create strings of bits that it’s hard to make but easy to copy, then use digital signatures for transactions. I get my Bitcoin (a string of bits) and then to transfer them to you I add a digital signature and send them to you. Every time we do a transaction, we tell (essentially) everybody else that the bits now belong to you. The closest analogy to this – one that I used in my previous book – is the stone currency of the island of Yap in the South Pacific, as described by Milton Friedman (Friedman 1991).


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

accounting loophole / creative accounting, bank run, banking crisis, banks create money, Bernie Madoff, bitcoin, blockchain, borderless world, Bretton Woods, BRICs, business cycle, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computer age, conceptual framework, credit crunch, cross-subsidies, David Graeber, debt deflation, dematerialisation, disintermediation, eurozone crisis, fiat currency, financial exclusion, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, German hyperinflation, Goldman Sachs: Vampire Squid, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kickstarter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liberal capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, mobile money, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, negative equity, new economy, Nixon shock, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer, peer-to-peer lending, Ponzi scheme, post scarcity, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative finance, remote working, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Satoshi Nakamoto, Scientific racism, seigniorage, Skype, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, Veblen good, Wave and Pay, Westphalian system, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond

This is a transaction database shared by all nodes participating in the system. 25 But unlike credit and debit card transactions, where the bank or card company manages the ledger, Bitcoin ledgers consist of block chains. 26 See https://www.casascius.com/. 27 For example, on April 15, 2013, an Asus laptop was available for 6.2271 BTC, which the website states was equivalent to US$629 (see https://www.bitcoinstore.com/). 28 See “Bitcoin takes an important step toward becoming part of every web browser on the planet,” http://qz.com/78014/bitcoin-is-now-part-of-the-web-sort-of/, accessed May 10, 2013. 29 Around 70 percent of items sold on Silk Road are drugs; other items include erotica, books, and fake IDs. 30 See http://www.bloomberg.com/news/2013–04–12/virtual-bitcoin-mining-is-a-real-world-environmental-disaster.html. 31 See http://krugman.blogs.nytimes.com/2013/04/12/adam-smith-hates-bitcoin/?smid=tw-NytimesKrugman&seid=auto. 32 See http://www.youtube.com/watch?v=wYHoE21kUcs. 33 One version of Bitcoin malware used Skype to turn infected computers into “slaves” of a Bitcoin generator (see http://www.securelist.com/en/blog/208194210/Skypemageddon_by_bitcoining). 34 The December 2013 crashes were linked to new Chinese government restrictions on Bitcoin transactions, see “China Bans Banks from Bitcoin Transactions,” Financial Times, December 5, 2013. China has the largest market in Bitcoins. Other major falls in Bitcoin’s value occurred from June 8 to 12, 2011 (when the price fell by 68 percent), on January 17, 2012 (36 percent), from August 17 to 19, 2012 (51 percent), between March 6 and 11, 2013 (33 percent), and on April 10, 2013 (61 percent).

See Forbes’s “An illustrated history of Bitcoin crashes,” http://www.forbes.com/sites/timothylee/2013/04/11/an-illustrated-history-of-bitcoin-crashes/. 35 The total value of all Bitcoins in the world exceeded $1 billion for the first time in March 2013. 36 See Slate, “Fool’s Gold,” http://www.slate.com/articles/news_and_politics/view_from_chicago/2013/04/bitcoin_is_a_ponzi_scheme_the_internet_currency_will_collapse.html. 37 “Bitcoin Is No Great Mystery,” see http://socialdemocracy21stcentury.blogspot.ie/2013/04/bitcoin-is-no-great-mystery.html, accessed April 15, 2013. 38 Sociologically, on the other hand, the image we have of the “average” Bitcoin user is rather predictable. According to a Bitcoin users’ survey that ran between February and April 2013 (with 1,087 responses), the “average” Bitcoin user is overwhelmingly male (95.2 percent) (for a discussion of Bitcoin and gender, see Scott 2014), 32.1 years old, libertarian or anarchocapitalist (44.3 percent), nonreligious (61.8 percent), with a full time job (44.7 percent), and is in a relationship (55.6 percent).

This is one potential weakness of the system resulting from the hard limit on Bitcoin supply. The other failing—much more widely discussed—is an inevitable function of its success, that is to say, its proneness to bubbles and crashes. Since its launch, the Bitcoin network has grown rapidly to become the most widely used alternative money system. Various retailers of material goods, music download websites, game providers, gambling sites, software providers, and high-profile online businesses such as WordPress, Reddit, Namecheap, and Mega, accept Bitcoins. The bitcoinstore.com sells a wide range of consumer goods.27 There are Bitcoin gift cards, dedicated payment system and debit cards, and a series of exchanges (such as Bitcoin-Central and Bitcoin-24.com) in which Bitcoins can be traded for major currencies in real time.


pages: 285 words: 86,853

What Algorithms Want: Imagination in the Age of Computing by Ed Finn

Airbnb, Albert Einstein, algorithmic trading, Amazon Mechanical Turk, Amazon Web Services, bitcoin, blockchain, Chuck Templeton: OpenTable:, Claude Shannon: information theory, commoditize, Credit Default Swap, crowdsourcing, cryptocurrency, disruptive innovation, Donald Knuth, Douglas Engelbart, Douglas Engelbart, Elon Musk, factory automation, fiat currency, Filter Bubble, Flash crash, game design, Google Glasses, Google X / Alphabet X, High speed trading, hiring and firing, invisible hand, Isaac Newton, iterative process, Jaron Lanier, Jeff Bezos, job automation, John Conway, John Markoff, Just-in-time delivery, Kickstarter, late fees, lifelogging, Loebner Prize, Lyft, Mother of all demos, Nate Silver, natural language processing, Netflix Prize, new economy, Nicholas Carr, Norbert Wiener, PageRank, peer-to-peer, Peter Thiel, Ray Kurzweil, recommendation engine, Republic of Letters, ride hailing / ride sharing, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, social graph, software studies, speech recognition, statistical model, Steve Jobs, Steven Levy, Stewart Brand, supply-chain management, TaskRabbit, technological singularity, technoutopianism, The Coming Technological Singularity, the scientific method, The Signal and the Noise by Nate Silver, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, transaction costs, traveling salesman, Turing machine, Turing test, Uber and Lyft, Uber for X, uber lyft, urban planning, Vannevar Bush, Vernor Vinge, wage slave

Other nodes in the network then accept this newly minted tail for the blockchain and turn to assembling new transactions into a new block. The Bitcoin software is carefully calibrated so that the community generates a new block approximately every ten minutes (just like Nakamoto’s paper suggests), and the overall production of Bitcoin is itself carefully orchestrated. The system will gradually taper the reward for completing new blocks to zero, thereby ceasing the creation of new Bitcoins entirely, once 21 million Bitcoins have been created.26 At that point, transaction fees alone will provide the incentive for Bitcoin users to dedicate their computers to endlessly updating the blockchain. Figure 5.1 The blockchain, a system for transparent, public accounting of Bitcoin transactions. I am dwelling on the details of this elaborate process for delivering financial consensus because Bitcoin is not simply a decentralized currency but a revaluation of commerce in algorithmic terms.

Up to this point, Bitcoin would simply be another payment scheme that depended on some central authority to track public keys and defend against what is called the “double spending problem”—the risk that the money you have just received in payment might also have been spent somewhere else, analogous to a sort of digital counterfeiting. But Bitcoin’s second innovation is where we discover a new form of computational arbitrage, in the consensus-driven mechanism of the blockchain. The blockchain is the public ledger of all Bitcoin transactions in the history of the currency. It contains a detailed accounting of every transaction since the currency’s instantiation, a digital file that now exceeds 20 gigabytes in size and must be downloaded locally by every Bitcoin software client. The blockchain is the algorithm that implements the political critique of Bitcoin, a marvel of arbitrage that inverts the traditional relationship between privacy and transparency. Every transaction, every incremental unit of Bitcoin value, is traced through the blockchain, and each of those transactions is tied to one or more buyer and seller identities.

The identities are simply alphanumeric strings derived from the public keys of an asymmetric encryption protocol, the Elliptic Curve Digital Signature Algorithm. The transactions annotate the movement of some quantity of Bitcoin from one identity to another. Through the blockchain, which is constantly updated and authenticated by the Bitcoin community (as I’ll discuss below), it’s possible to trace each unit of currency back to an origination point, through every single transaction it’s ever been part of. The entire Bitcoin marketplace is an open book, from the darkest recesses of terrorism financing to booking hotel rooms, purchasing virtual goods from Zynga, and ordering marijuana from the infamous digital marketplace Silk Road.25 But how does this actually work? Since the Bitcoin network has no central authority, anyone completing a transaction announces it through a peer-to-peer network. The decentralized nature of the system is meant to account for the problem that information may flow unevenly across the network, that some nodes may suddenly appear or disappear, and for the intentional design constraint of abolishing the central bank or switching station to correlate and sequence all financial activity.


pages: 218 words: 68,648

Confessions of a Crypto Millionaire: My Unlikely Escape From Corporate America by Dan Conway

Affordable Care Act / Obamacare, Airbnb, bank run, basic income, bitcoin, blockchain, buy and hold, cloud computing, cognitive dissonance, corporate governance, crowdsourcing, cryptocurrency, disruptive innovation, distributed ledger, double entry bookkeeping, Ethereum, ethereum blockchain, fault tolerance, financial independence, gig economy, Gordon Gekko, Haight Ashbury, high net worth, job satisfaction, litecoin, Marc Andreessen, Mitch Kapor, obamacare, offshore financial centre, Ponzi scheme, prediction markets, rent control, reserve currency, Ronald Coase, Satoshi Nakamoto, Silicon Valley, smart contracts, Steve Jobs, supercomputer in your pocket, Turing complete, Uber for X, universal basic income, upwardly mobile

One day, in late 2015, while searching for a widget article, I came across something about Bitcoin. I remembered that the price of bitcoin had been high a couple of years before. Back then I had thought it was a joke. But now that the price had fallen, a question entered my mind: What if it goes up again? For the next few nights, I read about Bitcoin. “Bitcoin is dead,” the Weekly Standard, among many others, announced. But most stories included quotes from people who still believed in it. They said it wasn’t dead. They said it could never die. I visited the online crypto communities. True believers persisted. Some claimed to be economists and investment experts. A popular sentiment was that a single bitcoin, about $400 as I read, would be worth $50,000 in the not-so-distant future. They were certain.

I loved the idea of digital money with Bitcoin, but what Ethereum was promising was altogether more mind-blowing. Whereas Bitcoin was billed as a new kind of money, ETH was a new kind of fuel. To use the Ethereum blockchain, one needed to pay a small amount of ETH. All of the decentralized applications (dApps) and organizations being dreamed up would require ETH to run, theoretically driving the price up. By 2016, Bitcoin had existed for seven years and had a sizeable infrastructure behind it. Now ETH was coming up. The price of one ETH was about three dollars when I discovered it, having already risen by 300 percent over the previous six months. The aggregate value of all ETH was about $400 million, significantly less than Bitcoin’s $12 billion market cap, based on a single bitcoin price of $380. It seemed to me that ETH could be even more valuable than Bitcoin one day.

These anarchists, hackers, Dungeons and Dragons enthusiasts, and self-proclaimed revolutionaries had been fighting for their vision of personal liberty with sticks and stones. They’d just acquired a lightsaber. Before long, several hundred computers pointed their power at the Bitcoin blockchain. And it worked. Before long, the network had more computing power than all of Google’s servers combined. But more importantly, Bitcoin had opened Pandora’s box. It had proved decentralization was an organizing principle that worked. Hypothetically, other things could be decentralized. From the moment the price of bitcoin started rising, the world focused almost exclusively on the price and very little on the underlying philosophy of decentralization. And who could blame them? In its first two years, despite high volatility, bitcoin was up 10,000 percent, making its early adopters filthy rich. As for Satoshi, no one knows if that pseudonym belongs to a man, a woman, or a group of people.


pages: 366 words: 94,209

Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity by Douglas Rushkoff

activist fund / activist shareholder / activist investor, Airbnb, algorithmic trading, Amazon Mechanical Turk, Andrew Keen, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Burning Man, business process, buy and hold, buy low sell high, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, centralized clearinghouse, citizen journalism, clean water, cloud computing, collaborative economy, collective bargaining, colonial exploitation, Community Supported Agriculture, corporate personhood, corporate raider, creative destruction, crowdsourcing, cryptocurrency, disintermediation, diversified portfolio, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, fiat currency, Firefox, Flash crash, full employment, future of work, gig economy, Gini coefficient, global supply chain, global village, Google bus, Howard Rheingold, IBM and the Holocaust, impulse control, income inequality, index fund, iterative process, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joseph Schumpeter, Kickstarter, loss aversion, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, Marshall McLuhan, means of production, medical bankruptcy, minimum viable product, Mitch Kapor, Naomi Klein, Network effects, new economy, Norbert Wiener, Oculus Rift, passive investing, payday loans, peer-to-peer lending, Peter Thiel, post-industrial society, profit motive, quantitative easing, race to the bottom, recommendation engine, reserve currency, RFID, Richard Stallman, ride hailing / ride sharing, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, social graph, software patent, Steve Jobs, TaskRabbit, The Future of Employment, trade route, transportation-network company, Turing test, Uber and Lyft, Uber for X, uber lyft, unpaid internship, Y Combinator, young professional, zero-sum game, Zipcar

Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” bitcoin.org, October 31, 2008. 28. Ibid. 29. Pedro Franco, Understanding Bitcoin: Cryptography, Engineering and Economics (New York: John Wiley & Sons, 2014). 30. Ibid. 31. Andreas M. Antonopoulos, Mastering Bitcoin: Unlocking Digital Cryptocurrencies (Sebastopol, Calif.: O’Reilly Media, 2014). 32. Franco, Understanding Bitcoin. 33. Antonopoulos, Mastering Bitcoin. 34. Rob Wile, “The Chinese Are in Love with Bitcoin and It’s Driving the Digital Currency’s Prices into the Stratosphere,” businessinsider.com, October 29, 2013. 35. Rebecca Grant, “A Single Bitcoin Was Worth $10 a Year Ago—Today It’s Worth $1,000,” venturebeat.com, November 27, 2013. 36. Robert McMillan, “The Inside Story of Mt. Gox, Bitcoin’s $460 Million Disaster,” wired.com, March 3, 2014. 37.

It is addressing the problem of how people can transact securely without a central mediator and do so anonymously. And Bitcoin is most assuredly secure. For the record, the much-publicized bitcoin robberies and cyberattacks have been on some of the bitcoin exchanges and online wallet systems—one of them adapted from a gaming Web site that was never intended to secure banking records.36 Even so, they have nothing to do with the Bitcoin blockchain itself, which is, for all intents and purposes, impenetrable. Bitcoin’s failure to overcome our business culture’s bias for hoarding and scarcity may be a temporary setback, or it could prove to be a fundamental flaw in the way the system was designed. The Bitcoin blockchain generates an arbitrarily limited supply of bitcoins. It may have been meant to counteract what sometimes seems like the profligate pumping of money into the economy by central banks.

This is a money system that works through protocols—digital handshakes between peers—instead of establishing security through central authorities. Bitcoin is based on a database known as the “blockchain.” The blockchain is a public ledger of every bitcoin transaction ever. It doesn’t sit on a server at a bank or in the basement of a credit-card company’s headquarters; it lives on the computers of everyone in the Bitcoin network. When bitcoins are transacted, an algorithm corresponding to that transaction is “published” to the blockchain. The algorithm is just a description of the transaction itself, as in “2 bitcoins came from A and went to B.” Instead of a list of users and their bitcoin balances, the ledger simply lists the transactions in chronological order. It doesn’t follow people, it follows the money. It’s not a record of how much you have as much as a record of where the money came from and where it is going to.30, 31 To get a transaction into the ledger, two users must first agree to the exchange.


pages: 209 words: 53,236

The Scandal of Money by George Gilder

Affordable Care Act / Obamacare, bank run, Bernie Sanders, bitcoin, blockchain, borderless world, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, Claude Shannon: information theory, Clayton Christensen, cloud computing, corporate governance, cryptocurrency, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, Deng Xiaoping, disintermediation, Donald Trump, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, glass ceiling, Home mortgage interest deduction, index fund, indoor plumbing, industrial robot, inflation targeting, informal economy, Innovator's Dilemma, Internet of things, invisible hand, Isaac Newton, Jeff Bezos, John von Neumann, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, Law of Accelerating Returns, Marc Andreessen, Mark Zuckerberg, Menlo Park, Metcalfe’s law, money: store of value / unit of account / medium of exchange, mortgage tax deduction, obamacare, Paul Samuelson, Peter Thiel, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, reserve currency, road to serfdom, Robert Gordon, Robert Metcalfe, Ronald Reagan, Sand Hill Road, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, secular stagnation, seigniorage, Silicon Valley, smart grid, South China Sea, special drawing rights, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, time value of money, too big to fail, transaction costs, trickle-down economics, Turing machine, winner-take-all economy, yield curve, zero-sum game

In reaching for commodities in which to anchor his system of value, Ametrano should have ended with gold, with its intimate links to the irreversibility of time. In the end, a test of bitcoin or any other blockchain will be the price of gold. If in a mature bitcoin system the gold chain massively bifurcates from the blockchain, it will signify a disorientation of values. As in bitcoin itself, the majority of users will decide which branch bears economic truth.11 Since its creation in 2009, bitcoin’s price movements have been 80.4 percent correlated with the gold price.12 Bitcoin’s relatively tiny float has imparted much greater volatility. But its following gold down in 2014 should not have been alarming. If and when bitcoin matures into a meaningful currency, its kinship with gold, rooted in time, should become increasingly manifest. The conservative theories of money fail to address these issues.

The eminent Austrian offered similar objections to a proposal for private money backed by gold: “It would turn out to be a very good investment, for the reason that because of the increased demand for gold the value of gold would go up; but that very fact would make it very unsuitable as money.”4 Ametrano adds, “The unfeasibility of a bitcoin [or gold] loan is similar to that of a bitcoin or [gold] salary: neither a borrower nor an employer would want to face the risk of seeing her debt or salary liabilities growing a hundredfold in a few years.”5 He concludes, “This is the cryptocurrency paradox: In the successful attempt to get rid of any centralized monetary authority using the Bitcoin protocol, the bitcoin currency has inadvertently thrown away the flexibility of an elastic monetary policy.” In a presentation to the Bank of Italy, Ametrano rejected the idea that bitcoin will lose its instability with wider adoption: “This is indeed true, but not at all sufficient for stable prices, as demonstrated by the need of monetary actions to stabilize even globally accepted currencies such as the Euro and US dollar.”6 One can imagine the eminent men of Banca d’Italia nodding solemnly at this observation.

It must be rooted in the entropy of irreversible time. When the bitcoin innovators Satoshi Nakamoto and Nick Szabo sought to invent new forms of money, they explicitly designed algorithms that nullified the effects of technological advance in computer technology. As Moore’s Law improves the computer systems used to validate transactions and integrate them with the bitcoin blockchain, for example, the “proof of work” challenge in the algorithm becomes proportionately more difficult and the reward smaller. Bitcoin “miners” could gain their specified rewards, but they could not use their superfast devices to accelerate their own transactions or capture greater personal returns from them. Regardless of the evolution of computer technology, every group of transactions in the blockchain and every new issue of bitcoins would require a ten-minute span to verify and integrate, mine and mint.


pages: 326 words: 91,559

Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy by Nathan Schneider

1960s counterculture, Affordable Care Act / Obamacare, Airbnb, altcoin, Amazon Mechanical Turk, back-to-the-land, basic income, Berlin Wall, Bernie Sanders, bitcoin, blockchain, Brewster Kahle, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Clayton Christensen, collaborative economy, collective bargaining, Community Supported Agriculture, corporate governance, creative destruction, crowdsourcing, cryptocurrency, Debian, disruptive innovation, do-ocracy, Donald Knuth, Donald Trump, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, Food sovereignty, four colour theorem, future of work, gig economy, Google bus, hydraulic fracturing, Internet Archive, Jeff Bezos, jimmy wales, joint-stock company, Joseph Schumpeter, Julian Assange, Kickstarter, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, mass immigration, means of production, multi-sided market, new economy, offshore financial centre, old-boy network, Peter H. Diamandis: Planetary Resources, post-work, precariat, premature optimization, pre–internet, profit motive, race to the bottom, Richard Florida, Richard Stallman, ride hailing / ride sharing, Sam Altman, Satoshi Nakamoto, self-driving car, shareholder value, sharing economy, Silicon Valley, Slavoj Žižek, smart contracts, Steve Jobs, Steve Wozniak, Stewart Brand, transaction costs, Turing test, Uber and Lyft, uber lyft, underbanked, undersea cable, universal basic income, Upton Sinclair, Vanguard fund, white flight, Whole Earth Catalog, WikiLeaks, women in the workforce, working poor, Y Combinator, Y2K, Zipcar

Credit Union National Association, “Credit Union Data and Statistics,” cuna.org/Research-And-Strategy/Credit-Union-Data-And-Statistics; CoBank, “About CoBank,” cobank.com/About-CoBank.aspx. 4. Satoshi Nakamoto, “Bitcoin Open Source Implementation of P2P Currency,” P2P Foundation Ning forum (February 11, 2009), p2pfoundation.ning.com/forum/topics/bitcoin-open-source; see also the original Bitcoin white paper at bitcoin.org/bitcoin.pdf; for a fuller account of the rise of Bitcoin, see Nathaniel Popper, Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money (Harper, 2015). 5. Daniela Hernandez, “Homeless, Unemployed, and Surviving on Bitcoins,” Wired (September 13, 2013); Kim Lachance Shandrow, “Bill Gates: Bitcoin Is ‘Better Than Currency,’” Entrepreneur (October 3, 2014); for an eloquent critique of bitcoin, see Brett Scott’s “Visions of a Techno-Leviathan: The Politics of the Bitcoin Blockchain,” E-International Relations (June 1, 2014) and “How Can Cryptocurrency and Blockchain Technology Play a Role in Building Social and Solidarity Finance?”

working paper for the United Nations Research Institute for Social Development (February 2016). 6. Because many people who were writing about Bitcoin early on were also holders of bitcoins, reliable analysts were few and far between; Swanson’s work was a welcome exception. See his books at ofnum bers.com. Although Bitcoin’s open ledger is a statistician’s dream, it’s not easy to associate accounts to actual human beings. For demographic data, see Lui Smyth, “Bitcoin Community Survey 2014” (February 1, 2014), http://simulacrum.cc/2014/02/01/bitcoin-community-survey-2014; Neil Sardesai, “Who Owns All the Bitcoins—An Infographic of Wealth Distribution,” CryptoCoinsNews (March 31, 2014); CoinDesk, Who Really Uses Bitcoin? (June 10, 2015), coindesk.com/research/who-really-uses-bitcoin; Olga Kharif, “The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market,” Bloomberg Businessweek (December 8, 2017); Coin Dance, “Bitcoin Community Engagement by Gender Summary,” coin.dance/stats/gender (94.73 percent male in March 2018). 7.

In return for their calculations, miners earn payouts of new bitcoins from the network, plus transaction fees from users. (Capitalized Bitcoin is the system; bitcoin is the unit of currency.) Like mining precious metals, mining cryptocurrencies can be lucrative. But this TerraMiner IV had little hope of reward. At just about a year old, the miner represented a particularly rapid and fateful instance of the obsolescence that awaits every gizmo that alights on the cutting edge. Because of competition from faster, sleeker models already on the network, it could no longer mine enough bitcoins to pay for the electricity it burned. CoinTerra, the TerraMiner IV’s maker, filed for bankruptcy in early 2015. Like a used-up gold mine, the machine lent even the Bitcoin Center’s busiest evenings the sensation of a ghost town. Bitcoin was supposed to usher in a new global economy—gold for the internet age—and mining it was supposed to be an act of democracy.


pages: 305 words: 93,091

The Art of Invisibility: The World's Most Famous Hacker Teaches You How to Be Safe in the Age of Big Brother and Big Data by Kevin Mitnick, Mikko Hypponen, Robert Vamosi

4chan, big-box store, bitcoin, blockchain, connected car, crowdsourcing, Edward Snowden, en.wikipedia.org, Firefox, Google Chrome, Google Earth, Internet of things, Kickstarter, license plate recognition, Mark Zuckerberg, MITM: man-in-the-middle, pattern recognition, ransomware, Ross Ulbricht, self-driving car, Silicon Valley, Skype, Snapchat, speech recognition, Tesla Model S, web application, WikiLeaks, zero day, Zimmermann PGP

To maintain this anonymity, we need to convert our anonymously purchased prepaid gift cards to Bitcoin. In chapter 6 I talked about Bitcoin, virtual currency. By itself Bitcoin is not anonymous. They can be traced through what’s called a blockchain back to the source of the purchase; similarly, all subsequent purchases can be traced as well. So Bitcoin by itself is not going to hide your identity. We will have to run the funds through an anonymity mechanism: converting prepaid gift cards into Bitcoin, then running the Bitcoin through a laundering service. This process will result in anonymized Bitcoin to be used for future payments. We will need the laundered Bitcoin, for example, to pay for our VPN service and any future purchases of data usage on our portable hotspot or burner phone. Using Tor, you can set up an initial Bitcoin wallet at paxful.com or other Bitcoin wallet sites.

This requires setting up a fake e-mail address in advance (see here) and using an open wireless network. Once you have that fake e-mail address, use Tor to set up a Bitcoin wallet, find a Bitcoin ATM to fund the wallet, and then use a tumbler to essentially launder the Bitcoin so it cannot be traced back to you on the blockchain. This laundering process requires setting up two Bitcoin wallets using different Tor circuits. The first wallet is used to send the Bitcoin to the laundering service, and the second is set up to receive the laundered Bitcoin. Once you have achieved true anonymity by using open Wi-Fi out of camera view plus Tor, find a VPN service that accepts Bitcoin for payment. Pay with the laundered Bitcoin. Some VPN providers, including WiTopia, block Tor, so you need to find one that doesn’t—preferably with a VPN provider that doesn’t log connections.

I actually got the Bitcoin value that I wanted. But think about this: that laundering service now has one of my anonymous e-mail addresses and both Bitcoin addresses that were used in the transaction. So to further mix things up, I had the Bitcoin delivered to a second Bitcoin wallet that was set up by opening a new Tor circuit, which established new hops between me and the site I wanted to visit. Now the transaction is thoroughly obfuscated, making it very hard for someone to come along later and figure out that the two Bitcoin addresses are owned by the same person. Of course, the Bitcoin laundering service could cooperate with third parties by providing both Bitcoin addresses. That’s why it’s so important to securely purchase the prepaid gift cards. After using the gift cards to purchase Bitcoin, remember to securely dispose of the plastic cards (not in your trash at home).


pages: 170 words: 49,193

The People vs Tech: How the Internet Is Killing Democracy (And How We Save It) by Jamie Bartlett

Ada Lovelace, Airbnb, Amazon Mechanical Turk, Andrew Keen, autonomous vehicles, barriers to entry, basic income, Bernie Sanders, bitcoin, blockchain, Boris Johnson, central bank independence, Chelsea Manning, cloud computing, computer vision, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, Dominic Cummings, Donald Trump, Edward Snowden, Elon Musk, Filter Bubble, future of work, gig economy, global village, Google bus, hive mind, Howard Rheingold, information retrieval, Internet of things, Jeff Bezos, job automation, John Maynard Keynes: technological unemployment, Julian Assange, manufacturing employment, Mark Zuckerberg, Marshall McLuhan, Menlo Park, meta analysis, meta-analysis, mittelstand, move fast and break things, move fast and break things, Network effects, Nicholas Carr, off grid, Panopticon Jeremy Bentham, payday loans, Peter Thiel, prediction markets, QR code, ransomware, Ray Kurzweil, recommendation engine, Renaissance Technologies, ride hailing / ride sharing, Robert Mercer, Ross Ulbricht, Sam Altman, Satoshi Nakamoto, Second Machine Age, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, smart cities, smart contracts, smart meter, Snapchat, Stanford prison experiment, Steve Jobs, Steven Levy, strong AI, TaskRabbit, technological singularity, technoutopianism, Ted Kaczynski, the medium is the message, the scientific method, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, too big to fail, ultimatum game, universal basic income, WikiLeaks, World Values Survey, Y Combinator

And people trust bitcoin and the maths that underpins it. At the institute’s cafe the staff were paid in bitcoin; rent collected for their co-working space was paid in bitcoin, too. I was given a little plastic card with a QR code, and transferred bitcoin on to it using one of three yellow ATM machines. From that point on, every time I wanted anything I just scanned the QR code. A coffee. Ping! A Red Bull. Ping! Some goulash. Ping! A postcard of Edward Snowden. Ping! I didn’t use my koruna once.* Bitcoin is more than just money, though: it’s a new way of handling information. Bear with me on this short-but-important technical detour. Every time someone sends a bitcoin payment to a recipient, a record of the transaction is stored in something called the blockchain, a huge database of every bitcoin transaction ever made.

There are now hundreds of encrypted messaging apps: Signal, WhatsApp, FrozenChat, ChatSecure, Wickr and more. WikiLeaks continues to cause mayhem by exposing state and political secrets. The most popular crypto-anarchy technology at the moment is probably bitcoin. In case you are not familiar with it, bitcoin is a digital currency. I won’t describe in detail how it works here – there are plenty of other good guides available – but here’s the short version: a quantity of bitcoin is stored at a bitcoin address, the key to which is a unique string of letters and numbers that can be kept on a website, desktop, mobile phone or even a piece of paper. Anyone can download a bitcoin wallet on to their computer, buy bitcoin with traditional currency from a currency exchange, and use them to buy or sell a growing number of products or services as easily as sending an email. Transactions are secure, fast and free, with no central authority controlling value or supply, and no middlemen taking a slice.

As with most new technologies, bitcoin has had teething problems,* and has been subject to wild speculation and price volatility. But these are early days. Bitcoin may not become the dominant cryptocurrency when the dust settles, but they are here to stay because of the benefits that they offer ordinary people and businesses. What matters most, however, is that people are using these systems even though they are not backed by any central government. On arriving at the Cryptoanarchist Institute, I joined the queue for food and coffee. But my Czech currency, koruna, which I had exchanged at the airport at an extortionate rate, were not accepted. ‘We only take bitcoin,’ said the assistant. (I later learned that this was the one place in the world that accepted only bitcoin.) Ever since we abandoned the gold standard, all national currencies have run on trust.


pages: 960 words: 125,049

Mastering Ethereum: Building Smart Contracts and DApps by Andreas M. Antonopoulos, Gavin Wood Ph. D.

Amazon Web Services, bitcoin, blockchain, continuous integration, cryptocurrency, Debian, domain-specific language, don't repeat yourself, Edward Snowden, en.wikipedia.org, Ethereum, ethereum blockchain, fault tolerance, fiat currency, Firefox, Google Chrome, intangible asset, Internet of things, litecoin, move fast and break things, move fast and break things, node package manager, peer-to-peer, Ponzi scheme, prediction markets, pull request, QR code, Ruby on Rails, Satoshi Nakamoto, sealed-bid auction, sharing economy, side project, smart contracts, transaction costs, Turing complete, Turing machine, Vickrey auction, web application, WebSocket

Big-endian A positional number representation where the most significant digit is first. The opposite of little-endian, where the least significant digit is first. BIPs Bitcoin Improvement Proposals. A set of proposals that members of the Bitcoin community have submitted to improve Bitcoin. For example, BIP-21 is a proposal to improve the Bitcoin uniform resource identifier (URI) scheme. Block A collection of required information (a block header) about the comprised transactions, and a set of other block headers known as ommers. Blocks are added to the Ethereum network by miners. Blockchain In Ethereum, a sequence of blocks validated by the proof-of-work system, each linking to its predecessor all the way to the genesis block. This varies from the Bitcoin protocol in that it does not have a block size limit; it instead uses varying gas limits. Bytecode An abstract instruction set designed for efficient execution by a software interpreter or a virtual machine.

Bitcoin, Ethereum’s Development Culture balance, world state and, Ethereum State Bamboo, Introduction to Ethereum High-Level Languages Bancor, Real-World Examples: ERC20 and Bancor batching, The JSON-RPC Interface batchTransfer function, Real-World Examples: PoWHC and Batch Transfer Overflow (CVE-2018–10299) big-endian, defined, Quick Glossary BIP-32 standardextended public and private keys, Extended public and private keys HD wallets and, HD Wallets (BIP-32) and Paths (BIP-43/44)-Index numbers for normal and hardened derivation BIP-39 standard, Seeds and Mnemonic Codes (BIP-39), Mnemonic Code Words (BIP-39)-Working with mnemonic codesderiving seed from mnemonic words, From mnemonic to seed generating code words with, Generating mnemonic words libraries, Working with mnemonic codes optional passphrase with, Optional passphrase in BIP-39 working with mnemonic codes, Working with mnemonic codes BIP-43 standard, Navigating the HD wallet tree structure BIP-44 standard, Navigating the HD wallet tree structure BIPs (see Bitcoin improvement proposals) Bitcoinas token, Tokens on Ethereum development culture, Ethereum’s Development Culture Ethereum blockchain compared to Bitcoin blockchain, Ethereum: A General-Purpose Blockchain Ethereum compared to, Compared to Bitcoin Ethereum definition compared to, Ethereum Clients limitations of, The Birth of Ethereum Bitcoin Core, Components of a Blockchain Bitcoin improvement proposals (BIPs), Quick GlossaryHierarchical Deterministic Wallets (BIP-32/BIP-44), Hierarchical Deterministic Wallets (BIP-32/BIP-44) Mnemonic Code Words (BIP-39), Seeds and Mnemonic Codes (BIP-39), Mnemonic Code Words (BIP-39)-Working with mnemonic codes Multipurpose HD Wallet Structure (BIP-43), HD Wallets (BIP-32) and Paths (BIP-43/44)-Navigating the HD wallet tree structure bitcoind client, Components of a Blockchain blind calls, Raw call, delegatecall block gas limit, Block Gas Limit block object, Block context block timestamp manipulation security threat, Block Timestamp Manipulation-Real-World Example: GovernMentalpreventative techniques, Preventative Techniques real-world example: GovernMental, Real-World Example: GovernMental vulnerability, The Vulnerability block, defined, Quick Glossary blockchaincomponents of, Components of a Blockchain, Ethereum’s Components creating contract on, Creating the Contract on the Blockchain-Withdrawing from Our Contract defined, Quick Glossary Ethereum as developer's blockchain, Why Learn Ethereum?

Start by asking for a description of the components in the preceding list, then ask whether this “blockchain” exhibits the characteristics of being open, public, etc. The Birth of Ethereum All great innovations solve real problems, and Ethereum is no exception. Ethereum was conceived at a time when people recognized the power of the Bitcoin model, and were trying to move beyond cryptocurrency applications. But developers faced a conundrum: they either needed to build on top of Bitcoin or start a new blockchain. Building upon Bitcoin meant living within the intentional constraints of the network and trying to find workarounds. The limited set of transaction types, data types, and sizes of data storage seemed to limit the sorts of applications that could run directly on Bitcoin; anything else needed additional off-chain layers, and that immediately negated many of the advantages of using a public blockchain. For projects that needed more freedom and flexibility while staying on-chain, a new blockchain was the only option.


pages: 349 words: 109,304

American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road by Nick Bilton

bitcoin, blockchain, crack epidemic, Edward Snowden, mandatory minimum, Marc Andreessen, Mark Zuckerberg, Ross Ulbricht, Rubik’s Cube, Satoshi Nakamoto, side project, Silicon Valley, Skype, South of Market, San Francisco, Steve Jobs, Ted Kaczynski, the market place, trade route, Travis Kalanick, white picket fence, WikiLeaks

And so, for a year, the idea sat on a shelf in Ross’s mind. That was, until now. Ross had come across a technology that had recently emerged called Bitcoin. It was being billed as a new form of digital cash that was, from the research he had done, completely untraceable. Anyone in the world could use it to buy and sell anything without leaving digital fingerprints behind. The people (or person) who had created this new technology were anonymous, but the idea was simple: While you needed dollars to buy things in America, pounds in England, yen in Japan, or rupees in India, this new Bitcoin currency was meant to be used all around the world and specifically on the Internet. And just like cash, it was untraceable. To get some Bitcoins, you could exchange them online in the same way you could go to the airport and exchange dollars for euros.

And there, for sale on the Silk Road, were the magic mushrooms Ross had grown a few months earlier, listed for sale as if he were hawking a used bicycle or a box of Girl Scout cookies on Craigslist. He then explained how to buy Bitcoins, the currency needed to buy drugs on the site. It was like buying coins at a video arcade. You exchanged your cash for tokens, and then you got to play. Just as at an arcade, at the end of the day, no one knew who had used those tokens because they all looked the same. (Bitcoin wasn’t just meant for illegal purchases, either; you could use the digital cash to buy things on dozens of legitimate Web sites around the world.) “Give me your credit card,” Ross said as he navigated to an online Bitcoin exchange, where Julia could interchange her real dollars for digital gold. They typed in her credit card information and watched as the page loaded.

Unlike seizing some contraband at a port or orchestrating a controlled delivery in the street to arrest someone, online drugs were a true Wild West with no existing protocols. It took several layers of approval, numerous meetings, and copious paperwork before Jared was finally allowed to commence his binge-shopping on the Amazon of drugs. Then there was the challenge of buying the Bitcoins. He was allocated $1,001 for his shopping excursion. So he took the cash, deposited it in a bank, then went to a Bitcoin exchange Web site where he could swap the dollars for Bitcoins. It wasn’t as easy as picking up drugs with cash on the street or finding a used bicycle on Craigslist, but it was still surprisingly painless considering what he was buying. During his first expedition to the Silk Road, Jared had three goals. The first was to trace drugs back to their dealers. The second was to match listings on the Web site to actual physical drugs and packaging, enabling him to build a profile of what mail from the Silk Road looked like, as he had done with the khat back at Customs and Border Protection.


pages: 218 words: 62,889

Sabotage: The Financial System's Nasty Business by Anastasia Nesvetailova, Ronen Palan

algorithmic trading, bank run, banking crisis, barriers to entry, Basel III, Bernie Sanders, big-box store, bitcoin, Black-Scholes formula, blockchain, Blythe Masters, bonus culture, Bretton Woods, business process, collateralized debt obligation, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, distributed ledger, diversification, Double Irish / Dutch Sandwich, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial innovation, financial intermediation, financial repression, fixed income, gig economy, Gordon Gekko, high net worth, Hyman Minsky, information asymmetry, interest rate derivative, interest rate swap, Joseph Schumpeter, Kenneth Arrow, litecoin, London Interbank Offered Rate, London Whale, Long Term Capital Management, margin call, market fundamentalism, mortgage debt, new economy, Northern Rock, offshore financial centre, Paul Samuelson, peer-to-peer lending, plutocrats, Plutocrats, Ponzi scheme, price mechanism, regulatory arbitrage, rent-seeking, reserve currency, Ross Ulbricht, shareholder value, short selling, smart contracts, sovereign wealth fund, Thorstein Veblen, too big to fail

Dread Pirate Roberts is now in prison serving a life sentence. The authorities still can’t get their hands on most of his bitcoins. 17. L. Katz, ‘Criminals may ditch bitcoin for Litecoin, Dash, study says’, Bloomberg, 8 February 2018, www.bloomberg.com/news/articles/2018-02-08/criminals-are-ditching-bitcoin-for-litecoin-and-dash-study-says. 18. Bateman, ‘Bitcoin might make tax havens obsolete’. 19. Ibid. 20. Conducted in January 2018. (Source: J. Wieczner, ‘Bitcoin investors aren’t paying their cryptocurrency taxes’, Fortune, 13 February 2018, http://fortune.com/2018/02/13/bitcoin-cryptocurrency-tax-taxes/). 21. Ibid. 22. Ibid. 23. Ibid. 24. E. Kelso, ‘New study: 80% of ICOs are scams, only 8% reach an exchange’, Bitcoin.com, 28 March 2018, https://news.bitcoin.com/80-of-icos-are-scams-only-8-reach-an-exchange/. 25. CNN, ‘ICO scams have raised more than $1 billion, report claims’, 19 May 2018, www.ccn.com/ico-scams-have-raised-more-than-1-billion-report-claims/. 26.

These and other cases of fraud across China’s shadow banking industry have prompted a broader crackdown on debt and financial risk by the authorities, partly driven by the desire to avoid expensive bailouts, as a number of China’s wealth management firms, many of which are Ponzi schemes, fold.14 BLOCKCHAIN If peer-to-peer is engulfed in scandals, what about blockchain and its most famous cyber offspring, bitcoin? Cryptocurrencies like bitcoin show the truism of Hyman Minsky’s theory. Minsky, one of the greatest financial economists of the twentieth century, once said: ‘Anybody can create money, the problem is to get it accepted.’ Bitcoin is a currency that virtualizes in cyberspace as a reward for solving an algorithm. Bitcoin mining is an expensive business: one needs not only human capital but a lot of computer power, which in turn consumes a lot of energy. In 2013 US courts officially recognized bitcoin as a convertible decentralized virtual currency; in 2015 the Commodity Futures Trading Commission (CFTC) classified bitcoin as a commodity. Today, bitcoin can be used to pay for things and services, investors use it as an investment and there are places around the world where you can convert bitcoins into real cash; there are even derivatives on the value of bitcoin.

So the IRS isn’t stupid.’23 Second, sabotage through crypto mirrors the general problem of financial engineering and tax evasion. Bitcoin could theoretically allow wealthy speculators to complete complicated commercial transactions, such as tax-exempt stock and gold-swapping trades that involve buying agents acting as fronts by using local currencies to facilitate the exchange. That is exactly what appears to be happening in response to the first stage of regulations concerning cryptocurrencies. The sale of bitcoin is, as mentioned above, a taxable event; but using bitcoin as a collateral is not. There has been a massive expansion of bitcoin-backed credit nurturing the shadow banking system. Similarly, now that bitcoin is recognized as a currency, financial derivatives based on bitcoin are also available, and those transactions are, as yet, not subject to taxation.


pages: 375 words: 88,306

The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan

additive manufacturing, Airbnb, AltaVista, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, basic income, bitcoin, blockchain, Burning Man, call centre, collaborative consumption, collaborative economy, collective bargaining, commoditize, corporate social responsibility, cryptocurrency, David Graeber, distributed ledger, employer provided health coverage, Erik Brynjolfsson, Ethereum, ethereum blockchain, Frank Levy and Richard Murnane: The New Division of Labor, future of work, George Akerlof, gig economy, housing crisis, Howard Rheingold, information asymmetry, Internet of things, inventory management, invisible hand, job automation, job-hopping, Kickstarter, knowledge worker, Kula ring, Lyft, Marc Andreessen, megacity, minimum wage unemployment, moral hazard, moral panic, Network effects, new economy, Oculus Rift, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, peer-to-peer rental, profit motive, purchasing power parity, race to the bottom, recommendation engine, regulatory arbitrage, rent control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Ross Ulbricht, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart contracts, Snapchat, social software, supply-chain management, TaskRabbit, The Nature of the Firm, total factor productivity, transaction costs, transportation-network company, two-sided market, Uber and Lyft, Uber for X, uber lyft, universal basic income, Zipcar

The right place to start is by understanding Bitcoin. Understanding Decentralized Peer-to-Peer Exchange In the simplest possible terms, bitcoin is a digital currency. (I refer to the currency using lowercase “b,” and the platform, technology, or ecosystem using uppercase “B.”) You can acquire bitcoin by exchanging it for your dollars, euros, or yen, by providing someone with a product or service that they pay you for in bitcoin, or by “mining” bitcoin (more on this later). Your acquisition and subsequent possession of this bitcoin exists as one or more entries in a public ledger (the blockchain) in which you are identified by a secure anonymized “key.” Each time you use your bitcoin, the new transaction is recorded as yet another entry in the ledger. A lot of the attention paid to Bitcoin has focused on its success in creating currency without a government backer, about how bitcoin value measured in traditional money fluctuates a lot over time (although its exchange rate has stabilized considerably in 2015), and perhaps also about the use of bitcoin for commerce that many governments consider illegal.

A lot of the attention paid to Bitcoin has focused on its success in creating currency without a government backer, about how bitcoin value measured in traditional money fluctuates a lot over time (although its exchange rate has stabilized considerably in 2015), and perhaps also about the use of bitcoin for commerce that many governments consider illegal. Instead of rehashing those topics, I focus here on thinking about Bitcoin as one of many applications of a new set of enabling technologies. I also discuss two other related applications: OpenBazaar and La’Zooz. Through this discussion, some of the key elements of the economics and technology of decentralized peer-to-peer marketplaces will become more transparent. Bitcoin Many of the critical pieces of a decentralized peer-to-peer market are part of Bitcoin. Let’s say that you want to send your friend Clay digital money.

Furthermore, a ledger that has to be distributed across every client can grow awfully large over time, and scalability of blockchain-based applications remains an open question. Payment systems like Bitcoin, because of the way they delay settlement, may need to be rebuilt to handle the real-time payments that credit cards and mobile payment systems like PayPal manage with ease today. Part of the solution to both of these challenges will come from the creation of a greater fraction of “off-the-book” transactions, but this creates a new layer of intermediation. Off-the-book transactions also create new risks. Some of you may recall Mt.Gox, the exchange that held its users’ bitcoin in its own centralized Bitcoin accounts while maintaining a parallel off-the-blockchain system of keeping track of which users had how much bitcoin. Mt.Gox ceased operations in 2014 following the 2013 loss of the equivalent of $450 million of its users’ bitcoin because of what appeared to be a hacker having gained access to its Bitcoin accounts.


pages: 430 words: 68,225

Blockchain Basics: A Non-Technical Introduction in 25 Steps by Daniel Drescher

bitcoin, blockchain, business process, central bank independence, collaborative editing, cryptocurrency, disintermediation, disruptive innovation, distributed ledger, Ethereum, ethereum blockchain, fiat currency, job automation, linked data, peer-to-peer, place-making, Satoshi Nakamoto, smart contracts, transaction costs

The Role of Managing Ownership The provisional definition does not say anything about Bitcoin or managing ownership of cryptographic money. This may come as a surprise since many articles and books written about the blockchain claim that its purpose is to manage ownership of digital currencies. The truth is, managing ownership of cryptographic money is a very prominent and natural application case of the blockchain, but it is not the only one. The blockchain has a wide and diverse range of applications. However, there are two reasons why the management of ownership of digital goods is the most discussed application of the blockchain. 1Nakamoto, Satoshi. Bitcoin: a peer-to-peer electronic cash system. 2008. https://bitcoin.org/ bitcoin.pdf. 36 Step 5 | Disambiguating the Term First, it is the easiest to understand and to explain.

How It Works The idea of selecting a transaction history based on the computational effort that was spent for creating it has led to the following two criteria: • The longest-chain-criterion2 • The heaviest-chain-criterion3 The Longest-Chain-Criterion The longest-chain-criterion is based on the idea that the blockchain-data- structure that comprises the most blocks represents the most aggregated computational effort. In order to study this criterion, let’s consider an initial situation were all the nodes of a distributed system maintain and agree on 2Nakamoto, Satoshi. Bitcoin: A peer-to-peer electronic cash system. 2008. https://bitcoin. org/bitcoin.pdf. 3Wood, Gavin. Ethereum: A secure decentralized generalized transaction ledger. 2014. http://gavwood.com/paper.pdf; Okupski, Krzysztof. Bitcoin developer reference. Working paper. 2014. Blockchain Basics 169 the identical version of the blockchain-data-structure, as depicted in Figure 19-1, which presents a schematic blockchain-data-structure that omits many details for simplicity. Each of the boxes represents one block that is identified with a shortened hash value.

Hence, the whole round trip through cryptography can be summed up as: start with some data, produce cypher text by encrypting the original data with a cryp- tographic key, preserve the cypher text or send it to someone, and finally recover the original data by decrypting the cypher text with a cryptographic key. Figure 12-1 illustrates the basic functioning of cryptography. 1Nakamoto, Satoshi. Bitcoin: A peer-to-peer electronic cash system. 2008. https://bitcoin. org/bitcoin.pdf. 2See Van Tilborg, Henk, and Sushil Jajodia, eds. Encyclopedia of cryptography and security. New York: Springer Science & Business Media, 2014. 96 Step 12 | Identifying and Protecting User Accounts Figure 12-1. Schematic illustration of basic cryptographic concepts and their terminology What happens if someone tries to decrypt cypher text by using an incorrect key?


pages: 304 words: 80,143

The Autonomous Revolution: Reclaiming the Future We’ve Sold to Machines by William Davidow, Michael Malone

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, agricultural Revolution, Airbnb, American Society of Civil Engineers: Report Card, Automated Insights, autonomous vehicles, basic income, bitcoin, blockchain, blue-collar work, Bob Noyce, business process, call centre, cashless society, citizen journalism, Clayton Christensen, collaborative consumption, collaborative economy, collective bargaining, creative destruction, crowdsourcing, cryptocurrency, disintermediation, disruptive innovation, distributed ledger, en.wikipedia.org, Erik Brynjolfsson, Filter Bubble, Francis Fukuyama: the end of history, Geoffrey West, Santa Fe Institute, gig economy, Gini coefficient, Hyperloop, income inequality, industrial robot, Internet of things, invention of agriculture, invention of movable type, invention of the printing press, invisible hand, Jane Jacobs, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, license plate recognition, Lyft, Mark Zuckerberg, mass immigration, Network effects, new economy, peer-to-peer lending, QWERTY keyboard, ransomware, Richard Florida, Robert Gordon, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Simon Kuznets, Snapchat, speech recognition, Stuxnet, TaskRabbit, The Death and Life of Great American Cities, The Rise and Fall of American Growth, the scientific method, trade route, Turing test, Uber and Lyft, uber lyft, universal basic income, uranium enrichment, urban planning, zero day, zero-sum game, Zipcar

Barrett, “Framework for Improving Critical Infrastructure Cybersecurity Version 1.1,” NIST Cybersecurity Framework, April 16, 2018, https://www.nist.gov/publications/framework-improving-critical-infrastructure-cybersecurity-version-11. 51. “Coal Is Fueling Bitcoin’s Meteoric Rise,” Bloomberg, December 14, 2017, https://www.bloomberg.com/news/articles/2017-12-15/turning-coal-into-bitcoin-dirty-secret-of-2017-s-hottest-market (accessed June 28, 2019). 52. Alex Hern, “How Iceland Became the Bitcoin Miners’ Paradise,” The Guardian, February 13, 2018, https://www.theguardian.com/world/2018/feb/13/how-iceland-became-the-bitcoin-miners-paradise (accessed June 28, 2019); and Foreign Staff, “Iceland Set to Use More Energy Mining Bitcoin Than Powering Homes,” Telegraph (UK), February 12, 2018, https://www.telegraph.co.uk/news/2018/02/12/iceland-set-use-energy-mining-bitcoin-powering-homes/ (accessed June 28, 2019). 53. “Bitcoin Mining Guide—Getting Started with Bitcoin Mining,” Bitcoin Mining.com, https://www.bitcoinmining.com/getting-started/ (accessed June 28, 2019); and “Genesis Mining Review,” Cryptorival.com, https://cryptorival.com/miners/genesismining/ (accessed June 28, 2019). 54.

Bitmain Technologies Ltd. has a 25,000 computer server farm in Erdos, Inner Mongolia, where coal power is inexpensive.51 Iceland’s cheap water power has made it a bitcoin miners’ paradise—so much so that Iceland is on the brink of using more electricity to mine bitcoins than to power its homes.52 Anybody can become a bitcoin miner by purchasing the appropriate hardware, downloading free mining software, and joining a bitcoin mining pool. If you want to save yourself the trouble, you can even sign up with a bitcoin cloud mining service such as Genesis for as little as $30.53 The current number of bitcoin miners is anyone’s guess—though it has been estimated that there may be 5,000 full nodes used by 100,000 miners. Of course, anything as important as a currency worth billions of dollars cannot survive as pure anarchy. It needs some type of governance. And in that regard, Bitcoin may be a bellwether of the new forms of governance in the Autonomous Revolution. Peer review, consensus building, and acceptance of changes by miners all determine the future of the currency. In the case of Bitcoin, as the number of transactions grew, some felt that changes had to be made to improve its speed.

“Bitcoin Mining Guide—Getting Started with Bitcoin Mining,” Bitcoin Mining.com, https://www.bitcoinmining.com/getting-started/ (accessed June 28, 2019); and “Genesis Mining Review,” Cryptorival.com, https://cryptorival.com/miners/genesismining/ (accessed June 28, 2019). 54. Ben Popken, “Why Did Bitcoin ‘Fork’ Today and What Is ‘Bitcoin Cash?,’” NBC News, August 1, 2017, https://www.nbcnews.com/business/consumer/why-bitcoin-forking-today-what-bitcoin-cash-n788581 (accessed June 28, 2019); and Max Gulker, “Bitcoin: Decentralized Governance Put to the Test,” American Institute of Economic Research, May 16, 2017, https://www.aier.org/research/bitcoin-decentralized-governance-put-test (accessed June 28, 2019). 55. Amanda Dixon, “America’s 15 Largest Banks,” Bankrate, May 30, 2019, https://www.bankrate.com/banking/americas-top-10-biggest-banks/#slide=1 (accessed June 28, 2019). 56. William H.


pages: 492 words: 118,882

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

accounting loophole / creative accounting, Ada Lovelace, Airbnb, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, Ben Bernanke: helicopter money, bitcoin, blockchain, Bretton Woods, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, David Graeber, deskilling, Diane Coyle, discrete time, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, ethereum blockchain, fiat currency, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, large denomination, liquidity trap, London Whale, low skilled workers, M-Pesa, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, MITM: man-in-the-middle, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, Satoshi Nakamoto, Satyajit Das, savings glut, seigniorage, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Von Neumann architecture, Washington Consensus

Miners who do these two functions—verifying the transaction and recording it on the blockchain—are then rewarded with bitcoins for their effort. This is how bitcoins are “mined.” Since the number of bitcoins is fixed to 21 million, it is like mining the bitcoins out of a reservoir. Hence the term miner. Although these series of operations seem relatively straightforward, they include elements of cryptography, computer science, game theory, and classical economics. The above breakdown is certainly not enough to pierce the complexities of how blockchains work, but is portrays how this decentralized and distributed value exchange system works. More importantly, it helps us realize that the for the first time since the inception of banking, we now have a system to help us transact without the aid of banks. Just as TCP/IP led to the creation of more subject-specific protocols, the advent of bitcoin has led to the creation of other value exchange protocols.

References Chapter 2 Table A-1 provides a list of books that offer technical and/or business application insights. All books have been referred to in the writing of this book Table A-1. Technical and business reference list Name Author Area of focus Mastering Bitcoin: Unlocking Digital Cryptocurrencies Andreas Antonopoulos Technical book that gives readers an understanding of how bitcoin works. Useful for computer scientists and advanced readers. Understanding Bitcoin: Cryptography, Engineering and Economics Pedro Franco Technical book that gives readers an understanding of how bitcoin works and the economic implications of the technology. Useful for students, business persons, and advanced readers. Value Web Chris Skinner General book that offers a holistic view of how FinTech and Blockchain firms are using technology to create a new internet of value.

While the purpose of the book it to shed more light on the implications of the widespread use of Blockchain technology, the growing diversity within the currency space cannot be fully excluded from the discussion. As the blockchain gains more traction in formal financial circles, its first manifestation in the form of Bitcoin is increasingly being excluded from the dialogue. This seems to be contrary to the symbiotic link between the two. What is more surprising is the fact that this tendency to separate bitcoin from blockchain is a repeat of what happened when the Internet first came into existence. As banks try to harness the power of the blockchain by creating private blockchains, we find ourselves witnessing the same execution of events as when private companies tried to create intranets instead of simply using the Internet. Whether you are a fan of the bitcoin or the blockchain or both, having a nuanced or biased view on the subject needs to be developed using the scientific method.


pages: 330 words: 91,805

Peers Inc: How People and Platforms Are Inventing the Collaborative Economy and Reinventing Capitalism by Robin Chase

Airbnb, Amazon Web Services, Andy Kessler, banking crisis, barriers to entry, basic income, Benevolent Dictator For Life (BDFL), bitcoin, blockchain, Burning Man, business climate, call centre, car-free, cloud computing, collaborative consumption, collaborative economy, collective bargaining, commoditize, congestion charging, creative destruction, crowdsourcing, cryptocurrency, decarbonisation, different worldview, do-ocracy, don't be evil, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, Ferguson, Missouri, Firefox, frictionless, Gini coefficient, hive mind, income inequality, index fund, informal economy, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Jane Jacobs, Jeff Bezos, jimmy wales, job satisfaction, Kickstarter, Lean Startup, Lyft, means of production, megacity, Minecraft, minimum viable product, Network effects, new economy, Oculus Rift, openstreetmap, optical character recognition, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, Richard Stallman, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, self-driving car, shareholder value, sharing economy, Silicon Valley, six sigma, Skype, smart cities, smart grid, Snapchat, sovereign wealth fund, Steve Crocker, Steve Jobs, Steven Levy, TaskRabbit, The Death and Life of Great American Cities, The Future of Employment, The Nature of the Firm, transaction costs, Turing test, turn-by-turn navigation, Uber and Lyft, uber lyft, Zipcar

Michael Carney, “GitHub CEO Explains Why the Company Took So Damn Long to Raise Venture Capital,” pando.com, June 20, 2013, http://pando.com/2013/06/20/github-ceo-explains-why-the-company-took-so-damn-long-to-raise-venture-capital. 20. “Benevolent Dictator for Life,” Wikipedia, https://en.wikipedia.org/wiki/Benevolent_dictator_for_life. 21. “Crypto-Currency Market Capitalizations,” http://coinmarketcap.com. 22. “Who Controls the Bitcoin Network?,” Bitcoin website, https://bitcoin.org/en/faq#who-controls-the-bitcoin-network. 23. Bitsmith, “Inside a Chinese Bitcoin Mine,” The Coinsman, August 11, 2014, www.thecoinsman.com/2014/08/bitcoin/inside-chinese-bitcoin-mine. 24. “Government as Impresario: Emergent Public Goods and Public Private Partnerships 2.0,” talk given by Nicholas Gruen as part of a luncheon series at the Berkman Center for Internet and Society, January 14, 2014, http://cyber.law.harvard.edu/events/luncheon/2014/01/gruen. 25.

Some platforms are of little (or no?) value until they get big enough. Bitcoin figured out how to cross this chasm and how to finance this crossing. The size of the reward for publishing/mining declines over time, going from high to low. Cleverly, Bitcoin paid people who took the most risk—who participated in the beginning—more Bitcoins for mining than to people who did this same task later. Paying more early on attracts people when the platform has the least value. The reward structure effectively borrows value from the future (when an established Bitcoin currency will have value) to finance the infrastructure building of the nascent and risky idea (when there is very little value). This is genius. Lastly, because what the Bitcoin people have earned will only be valuable if the whole Bitcoin enterprise succeeds, these early participants have every incentive to spread the good word and do what they can to make sure that it does.

All of the transactions on the public ledger are there for all to see, and open source. In the potentiality of block-chain visionaries, the most useful programs, contracts, and methods will be the ones that are most copied, eventually becoming standards. The Bitcoin.org website explains how this is accomplished with Bitcoin: Nobody owns the Bitcoin network.… [It] is controlled by all Bitcoin users around the world. While developers are improving the software, they can’t force a change in the Bitcoin protocol because all users are free to choose what software and version they use. In order to stay compatible with each other, all users need to use software complying with the same rules. Bitcoin can only work correctly with a complete consensus among all users. Therefore, all users and developers have a strong incentive to protect this consensus.22 While the block-chain protocol has necessarily evolved over the last six years, the evolution is driven by consensus, with the most suitable and widely adopted changes being the ones that win out over the alternatives.


pages: 361 words: 97,787

The Curse of Cash by Kenneth S Rogoff

Andrei Shleifer, Asian financial crisis, bank run, Ben Bernanke: helicopter money, Berlin Wall, bitcoin, blockchain, Boris Johnson, Bretton Woods, business cycle, capital controls, Carmen Reinhart, cashless society, central bank independence, cryptocurrency, debt deflation, disruptive innovation, distributed ledger, Edward Snowden, Ethereum, ethereum blockchain, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial exclusion, financial intermediation, financial repression, forward guidance, frictionless, full employment, George Akerlof, German hyperinflation, illegal immigration, inflation targeting, informal economy, interest rate swap, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, Kenneth Rogoff, labor-force participation, large denomination, liquidity trap, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, moveable type in China, New Economic Geography, offshore financial centre, oil shock, open economy, payday loans, price stability, purchasing power parity, quantitative easing, RAND corporation, RFID, savings glut, secular stagnation, seigniorage, The Great Moderation, the payments system, The Rise and Fall of American Growth, transaction costs, unbanked and underbanked, unconventional monetary instruments, underbanked, unorthodox policies, Y2K, yield curve

Another major concern under a Bitcoin currency standard (or any digital currency) is inflation. It is true that the supply of bitcoins has been capped at 21 million coins, a limit that is expected to be reached sometime in the twenty-second century. Some people worry that this cap will eventually imply deflation, if world growth continues but the supply of bitcoins is fixed. They should be much more worried about inflation than about deflation. How is that? Because Bitcoin does not have a monopoly on the underlying technology, imitators can appear, and indeed they already have. Over time, Bitcoin 1.0’s first-mover advantage may fade, especially if Bitcoin 2.0 or Bitcoin 3.0 offers a superior mechanism (e.g., much lower maintenance costs and more surefire anonymity). If so, the problem will be inflation, not deflation. Can the government really copy the new technologies to create a superior clearing mechanism for its own electronic currency?

Already, markets are forming to exploit this capacity, for example, in applications surrounding Ethereum.4 That distributed-ledger technology could in theory someday produce a superior currency, however, hardly means that the world is already there in practice. One problem is that the value of Bitcoin 1.0 fluctuates wildly (figure 14.1), so it hardly fulfills the function of a stable store of value. In principle, it could become more stable if it gained more widespread monetary acceptance. Figure 14.2 shows that the price of gold in terms of dollars was much more stable under the gold standard, even in real (purchasing-power) terms. Whether this could happen without a government that aimed to stabilize the value of Bitcoin 1.0 is at best a conjecture. Figure 14.1: Market price of bitcoins (US dollars). Source: Blockchain.info. Figure 14.2: Real gold price (US dollars). Source: 1850–1920, National Mining Association; 1921–2015, Bloomberg. Another major concern under a Bitcoin currency standard (or any digital currency) is inflation.

The basic idea, in a nutshell, is to create a system in which diverse private-sector individuals (or entities) are incentivized to maintain independent ledgers of transaction trees (or blockchains), and new transactions cannot clear the books without achieving a critical mass of third-party acceptance. A fair dose of encryption technology is also included, and in Bitcoin, for example, individuals are allowed to use aliases with passcode-protected accounts to make it difficult to determine their identities. A lot of truly fascinating science supports the different systems, and one can find many excellent treatments.2 Governments around the world have already begun regulating cryptocurrencies more aggressively. In the United States, Bitcoin wallets must now comply with anti-money-laundering rules, and the Internal Revenue Service has begun to issue rulings on how Bitcoin earnings should be taxed. The European Union, too, is in the process of intensifying its regulations. Where governments have the greatest leverage is in regulating how financial institutions interact with cryptocurrencies.


pages: 246 words: 70,404

Come and Take It: The Gun Printer's Guide to Thinking Free by Cody Wilson

3D printing, 4chan, active measures, Airbnb, airport security, Any sufficiently advanced technology is indistinguishable from magic, assortative mating, bitcoin, Chelsea Manning, disintermediation, fiat currency, Google Glasses, gun show loophole, jimmy wales, lifelogging, Mason jar, means of production, Menlo Park, Minecraft, national security letter, New Urbanism, peer-to-peer, Peter Thiel, Richard Stallman, ride hailing / ride sharing, Skype, thinkpad, WikiLeaks, working poor

Passing alongside an old border village, Amir brought up the European Central Bank’s new report on Bitcoin, which at that time had simply mentioned the prospect of regulation. “Everyone says it could have been worse!” he exclaimed. “This is the consensus. But these are the same people who accept the ‘being moderate’ fallacy. Like if there are two factions, they will balance out and the market will somehow find the best solution, despite being rigged by the powerful using influence and power to establish their vise grip on Bitcoin.” I nodded. I said the American gun industry was already long in the hands of the state, making it very hard to do anything innovative as a private person. Both sides, the manufacturers and the political class, even preferred it that way. It would be terrible if bitcoiners were to just sleepwalk into letting the bureaucrats license their firms and activities.

It would be terrible if bitcoiners were to just sleepwalk into letting the bureaucrats license their firms and activities. “There’s this bitcoin honey badger meme now which really gets under my skin,” Amir went on. “In essence it goes that it doesn’t matter what people or governments do, Bitcoin can just shrug it off and keep going. But it’s this simplistic lens, you know. It discards all of the technological issues and threats facing the protocol that we strive to protect against. Even people like Andreas push this. The idea is that Bitcoin as a consensus system subject to all power groups acting on it is an invincible agent of change no matter what. That it will infect the system and deploy a takeover. And so . . . driven by this view, there is this overwhelming push for ‘the mainstream,’ and in part you can see this is incentivized by the price. But there’s this push that at all costs, we must achieve the mainstream.”

PART IX Dropping the Liberator Mihai and I set out for Amir’s gathering at the hackerspace Progressbar. I stayed a step behind him, watching my Romanian friend navigate the cobbled streets and cramped corners. I had told Ben by email that Mihai read Falkvinge, the first leader of the Pirate Party. Among his other responsibilities, Mihai was the editor-in-chief of Bitcoin magazine, a position I was told he took after an employee of the magazine ran off with 200,000 bitcoin. Serious money, even at the start of 2013. We slipped through a breezeway and into the stark wind. We passed a gate and climbed a marbled spiral stair. At the highest floor, from behind the first door, I heard a great murmur. Inside were freaks and gangsters, dissidents and hackers, madmen and millionaires. All wrapped in dull coats and scarves, you wouldn’t have been able to tell the geniuses from the criminals.


pages: 395 words: 116,675

The Evolution of Everything: How New Ideas Emerge by Matt Ridley

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, Albert Einstein, Alfred Russel Wallace, AltaVista, altcoin, anthropic principle, anti-communist, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Boris Johnson, British Empire, Broken windows theory, Columbian Exchange, computer age, Corn Laws, cosmological constant, creative destruction, Credit Default Swap, crony capitalism, crowdsourcing, cryptocurrency, David Ricardo: comparative advantage, demographic transition, Deng Xiaoping, discovery of DNA, Donald Davies, double helix, Downton Abbey, Edward Glaeser, Edward Lorenz: Chaos theory, Edward Snowden, endogenous growth, epigenetics, Ethereum, ethereum blockchain, facts on the ground, falling living standards, Ferguson, Missouri, financial deregulation, financial innovation, Frederick Winslow Taylor, Geoffrey West, Santa Fe Institute, George Gilder, George Santayana, Gunnar Myrdal, Henri Poincaré, hydraulic fracturing, imperial preference, income per capita, indoor plumbing, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jane Jacobs, Jeff Bezos, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Khan Academy, knowledge economy, land reform, Lao Tzu, long peace, Lyft, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, meta analysis, meta-analysis, mobile money, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, Necker cube, obamacare, out of africa, packet switching, peer-to-peer, phenotype, Pierre-Simon Laplace, price mechanism, profit motive, RAND corporation, random walk, Ray Kurzweil, rent-seeking, reserve currency, Richard Feynman, rising living standards, road to serfdom, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, sharing economy, smart contracts, South Sea Bubble, Steve Jobs, Steven Pinker, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, twin studies, uber lyft, women in the workforce

Then, on 18 August 2008, a month before the financial crisis broke in earnest, a new domain name was registered anonymously: bitcoin.org. Two weeks later, somebody with the user name ‘Satoshi Nakamoto’ posted a nine-page paper outlining an idea for a peer-to-peer electronic cash system called bitcoin. The bitcoin system went live a few months later, on the day the British government reported its second bailout of the banks, an event referred to by Satoshi, who quoted a headline from The Times in his announcement of bitcoin’s birth. A month later Satoshi announced on the Peer-to-Peer Foundation website: ‘I’ve developed a new open source P2P e-cash system called Bitcoin. It’s completely decentralised, with no central server or trusted parties, because everything is based on crypto proof instead of trust. Give it a try, or take a look at the screenshots and design paper.’ His motivation was clear. Bitcoin was designed to maintain its value without any precious-metal backing, without any centralised issuer, and without any intrinsic value.

The price shot up in the wake of the financial crisis in Cyprus in 2013, when private depositors woke up to the fact that their conventional money was not safe in banks, because the government of Cyprus announced that it would seize over 40 per cent of all savings over $100,000. As investors around the world digested the arbitrary power of governments, bitcoin’s price rose from about $120 in September 2013 to almost $1,200 in December of that year. It has since slowly declined. At the time of writing, about $6 billion worth of money is held in bitcoins. But it is still a long way from taking over as the world’s reserve currency. It does not yet work as a unit of account. The volatility and bubble-like behaviour of bitcoins are not encouraging for a world reserve currency, and nor is its relatively small supply. It is also still not easy to get many traders, even online, to accept bitcoins. The first bitcoin exchange, Mt. Gox, collapsed in a pile of fraud. Moreover, bitcoins have proved very popular with drug dealers, especially via an online exchange called Silk Road.

It is hard to get your head around how bitcoin works. One of the pithiest explanations I have come across is in a recent launch by Ethereum, a business built to follow up on bitcoin: ‘The innovation provided by Satoshi is the idea of combining a very simple decentralised consensus protocol, based on nodes combining transactions into a “block” every ten minutes, creating an ever-growing blockchain, with proof of work as a mechanism through which nodes gain the right to participate in the system.’ If you think that’s hard to understand, you are not alone. I have yet to come across a description of blockchain technology in English, as opposed to mathematics, that is really clear. In outline, I know that bitcoin is effectively a public ledger – a compendium of transactions, stored by bitcoin users all over the world.


pages: 378 words: 94,468

Drugs 2.0: The Web Revolution That's Changing How the World Gets High by Mike Power

air freight, Alexander Shulgin, banking crisis, bitcoin, blockchain, Buckminster Fuller, Burning Man, cloud computing, credit crunch, crowdsourcing, death of newspapers, Donald Davies, double helix, Douglas Engelbart, Electric Kool-Aid Acid Test, fiat currency, Firefox, Fractional reserve banking, frictionless, Haight Ashbury, John Bercow, John Markoff, Kevin Kelly, Leonard Kleinrock, means of production, Menlo Park, moral panic, Mother of all demos, Network effects, nuclear paranoia, packet switching, pattern recognition, PIHKAL and TIHKAL, pre–internet, QR code, RAND corporation, Satoshi Nakamoto, selective serotonin reuptake inhibitor (SSRI), sexual politics, Skype, Stephen Hawking, Steve Jobs, Stewart Brand, trade route, Whole Earth Catalog, Zimmermann PGP

A new kind of currency is making official control of this area even harder. Bitcoin is an electronic cash system, produced using cryptography. It is a peer-to-peer currency, made by users, meaning that no central authority issues money or tracks transactions. For every legal bitcoin user, selling web design services or carrying out coding jobs for which they are paid in the currency, there are many more using bitcoins to buy drugs on the Silk Road. Bitcoin is today the preferred choice of hundreds of online drug dealers. You can buy bitcoins using cash or other currencies in hundreds of ways, with varying levels of anonymity. Using bitcoins can be, depending on how you use them, almost completely anonymous. Originally, bitcoins were produced by ‘miners’ – a figurative term for computer owners who donated their processor time to the project and were rewarded with coins for their efforts.

Liberty Gold is a virtual metal-backed currency from Costa Rica, purchasable automatically from anonymous servers with Western Union cash payments, whereby participants swap the transaction number for invisible currencies which they can then swap into other currencies. You could for a short period in 2011 even buy bitcoin by SMS: users would buy a simcard from Poland, or Belgium, or one of a dozen other countries, charge it with cash, send a text and receive their coins to their handset. ‘Mixing’ services too, can tumble the coins in and out of thousands of other bitcoin transactions and accounts, making a dense web of mathematics even denser still. When most investigators can’t even understand the basics of encryption, the likelihood that they or a jury member will reach an understanding of bitcoin is minimal. And when most small-scale drug transactions are small, under £100, who’s watching? The answer, so far, is that no one has been busted using evidence from the bitcoin blockchain. Bitcoin addresses, where you receive and store coins, are randomly generated strings of letters and numbers, and there’s no ID check system – and you can create another in moments.

The system was then flooded with speculators, forcing MtGox to limit withdrawals to US$1,000 worth of bitcoins a day to stem the flow and prop up the dollar-value of the currency.6 Network analysts Fergal Reid and Martin Harrigan of University College Dublin wrote a 2012 paper baldly titled ‘Bitcoin is Not Anonymous’. In it they demonstrated what the high-tech coining community knew – that the blockchain recorded all transactions. Reid posted in a comment thread following the release of his paper, ‘You don’t get anonymity automatically from the system. A lot of people out there think you do.’7 But the determined user can retain anonymity easily enough in the US at least, by entering a bank and paying cash into an exchanger’s account, for bitcoins are now traded just as dollars and euros are. (They now have a value that is decided by the market. The total bitcoin market capitalization stood at £72 million in November 2012 – with around 10 million coins valued by the secondary market at around £7.50 each.)


pages: 349 words: 114,038

Culture & Empire: Digital Revolution by Pieter Hintjens

4chan, airport security, AltaVista, anti-communist, anti-pattern, barriers to entry, Bill Duvall, bitcoin, blockchain, business climate, business intelligence, business process, Chelsea Manning, clean water, commoditize, congestion charging, Corn Laws, correlation does not imply causation, cryptocurrency, Debian, Edward Snowden, failed state, financial independence, Firefox, full text search, German hyperinflation, global village, GnuPG, Google Chrome, greed is good, Hernando de Soto, hiring and firing, informal economy, intangible asset, invisible hand, James Watt: steam engine, Jeff Rulifson, Julian Assange, Kickstarter, M-Pesa, mass immigration, mass incarceration, mega-rich, MITM: man-in-the-middle, mutually assured destruction, Naomi Klein, national security letter, Nelson Mandela, new economy, New Urbanism, Occupy movement, offshore financial centre, packet switching, patent troll, peak oil, pre–internet, private military company, race to the bottom, rent-seeking, reserve currency, RFC: Request For Comment, Richard Feynman, Richard Stallman, Ross Ulbricht, Satoshi Nakamoto, security theater, selection bias, Skype, slashdot, software patent, spectrum auction, Steve Crocker, Steve Jobs, Steven Pinker, Stuxnet, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trade route, transaction costs, twin studies, union organizing, wealth creators, web application, WikiLeaks, Y2K, zero day, Zipf's Law

If a large attacker were to control more than half of the verification network, they could generate unlimited BitCoins and destroy the currency by inflation. It depends on conventional broadband, so is vulnerable to surveillance. BitCoin transactions are public and individual BitCoin holders' transactions can be identified. It depends on a "digital wallet" held on a computer, which is vulnerable to malware attacks and physical seizure. The history of money on the Internet and the power of the banking industry suggest that BitCoin will come under serious attack in coming years. We can expect to see the same attacks that we've seen often before: Financial blockades, prosecutions, and technical attacks on BitCoin exchanges. Association of BitCoin users with terrorists and child pornographers. Surveillance of BitCoin transactions to break expectations of anonymity.

Cut down one Napster, and a dozen spring up in its place. Better, the Spider calculates, to buy time and find a way to control BitCoin, and make a profit from it. BitCoin is a surprisingly strong model in some ways, yet it still has several vulnerabilities. It will depend on exchanges for converting BitCoin to other currencies until it gains (if it ever does) a sufficient internal market. BitCoin transactions -- the blockchain -- are essentially public, and it's been shown that you can tie transactions back to individual identities. Lastly, and most importantly, the whole system depends on a distributed network of "miners," who recalculate transactions, and in the process generate new BitCoin. BitCoin depends on its miners to remain honest. If an attacker controls 51% or more of the miners, they can generate bogus transactions and crash the currency.

The same year that e-gold died, its successor popped up in the form of BitCoin, the first credible crypto-currency. While e-gold based its denomination on the tangible value of gold coins, BitCoin is backed by nothing more than mathematics. This has led people to accuse it of being a pyramid scheme, destined for collapse. BitCoin works by "mining" new coins as a side effect of doing the cryptographic bookkeeping for other people, processing the so-called "transaction chains." In the beginning, when transaction chains were short, they were easy to process, and people could mine thousands of coins on their PCs. Today, as chains are long, it takes more effort to mine coins. Every year, the number of coins that can be mined falls, so at some point there will be no new BitCoins. The BitCoin design and open source software was written by a prudently anonymous team calling themselves "Satoshi Nakamoto."


pages: 316 words: 117,228

The Code of Capital: How the Law Creates Wealth and Inequality by Katharina Pistor

"Robert Solow", Andrei Shleifer, Asian financial crisis, asset-backed security, barriers to entry, Bernie Madoff, bilateral investment treaty, bitcoin, blockchain, Bretton Woods, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, colonial rule, conceptual framework, Corn Laws, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, Donald Trump, double helix, Edward Glaeser, Ethereum, ethereum blockchain, facts on the ground, financial innovation, financial intermediation, fixed income, Francis Fukuyama: the end of history, full employment, global reserve currency, Hernando de Soto, income inequality, intangible asset, investor state dispute settlement, invisible hand, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, land reform, land tenure, London Interbank Offered Rate, Long Term Capital Management, means of production, money market fund, moral hazard, offshore financial centre, phenotype, Ponzi scheme, price mechanism, price stability, profit maximization, railway mania, regulatory arbitrage, reserve currency, Ronald Coase, Satoshi Nakamoto, secular stagnation, self-driving car, shareholder value, Silicon Valley, smart contracts, software patent, sovereign wealth fund, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, trade route, transaction costs, Wolfgang Streeck

Classic theories of money hold that money must perform three functions: it should be a store of value, a means of exchange, and a unit of account.50 Bitcoin has at best traces of the first two features: Its value has been pushed temporarily to unprecedented heights—but the high volatility of its price suggests that it is a lousy storage of value. And while many banks, retailers, and private parties now accept Bitcoins as a means of exchange, their reference price remains the US dollar and, like all holders of private assets, most investors expect to be able to convert Bitcoin into dollars (or another hard currency) at the time of their choosing. The brains behind Bitcoin, whoever they might be, had envisioned that this new private currency would become independent of, indeed an alternative to, state money. For others, Bitcoin was an asset to invest, if not speculate in, and since nobody prevented them from buying Bitcoin with state money of their own or with borrowed sums, so they did.

Since then, the trend has been downward, and by the fall of 2018, it stood at roughly $6,000, having shed more than two-thirds 198 c h a P te r 8 of its value in dollar terms—and other cryptocurrencies did not fare much better.39 Nobody knows exactly who invented Bitcoin. Satoshi Nakamoto, the official creator, is an alias for one, or perhaps several, digital coders. Some have proposed that Nick Szabo, the brain behind smart contracts and digital property rights, is the man behind Bitcoin, but he has denied this. Another contender is Craig Wright, a professed gambler from Australia who outed himself as the person behind the pseudonym, but not everyone is convinced.40 Be this as it may, Bitcoin embodies the hope of crypto-anarchists of a state-less future, but also the fears of conventional law enforcers about losing control over the financial flows that fund illicit businesses. Bitcoin is often referred to as digital money.41 Bitcoin may, however, be more adequately described as yet another form of private money: a privately coded asset that can shower its holders with enormous wealth in the short to medium term, but that will crash sooner or later absent effective state backing.

Recall the dilemma of Antonio in Shakespeare’s Merchant of Venice discussed in chapter 4, whose ship had not reached shore a n e w co d e ? 199 yet. As it happened, it never did, but it might have; and indeed, most ships do at least most of the time. There is, however, one aspect in which Bitcoin departs from these other forms of private money. Bitcoin is designed as money without credit: nobody can spend Bitcoin without proof of ownership.43 The “Bitcoin Manifesto,” published by the ominous Satoshi Nakamoto, explains that a key motivation for creating Bitcoin was to solve the “double-spending problem.”44 Yet, the ability to spend money one does not have is—for better or worse—the very essence of capitalism. Other forms of private money, the notes, bills of exchange, asset-backed securities, etc., are IOUs that are all assigned and traded with the expectation that they are convertible into state money whenever needed, and hopefully at a profit; convertibility may not be guaranteed, but the promise of convertibility makes these assets attractive and finds them buyers.


pages: 385 words: 111,113

Augmented: Life in the Smart Lane by Brett King

23andMe, 3D printing, additive manufacturing, Affordable Care Act / Obamacare, agricultural Revolution, Airbnb, Albert Einstein, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, Apple II, artificial general intelligence, asset allocation, augmented reality, autonomous vehicles, barriers to entry, bitcoin, blockchain, business intelligence, business process, call centre, chief data officer, Chris Urmson, Clayton Christensen, clean water, congestion charging, crowdsourcing, cryptocurrency, deskilling, different worldview, disruptive innovation, distributed generation, distributed ledger, double helix, drone strike, Elon Musk, Erik Brynjolfsson, Fellow of the Royal Society, fiat currency, financial exclusion, Flash crash, Flynn Effect, future of work, gig economy, Google Glasses, Google X / Alphabet X, Hans Lippershey, Hyperloop, income inequality, industrial robot, information asymmetry, Internet of things, invention of movable type, invention of the printing press, invention of the telephone, invention of the wheel, James Dyson, Jeff Bezos, job automation, job-hopping, John Markoff, John von Neumann, Kevin Kelly, Kickstarter, Kodak vs Instagram, Leonard Kleinrock, lifelogging, low earth orbit, low skilled workers, Lyft, M-Pesa, Mark Zuckerberg, Marshall McLuhan, megacity, Metcalfe’s law, Minecraft, mobile money, money market fund, more computing power than Apollo, Network effects, new economy, obamacare, Occupy movement, Oculus Rift, off grid, packet switching, pattern recognition, peer-to-peer, Ray Kurzweil, RFID, ride hailing / ride sharing, Robert Metcalfe, Satoshi Nakamoto, Second Machine Age, selective serotonin reuptake inhibitor (SSRI), self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, Skype, smart cities, smart grid, smart transportation, Snapchat, social graph, software as a service, speech recognition, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, TaskRabbit, technological singularity, telemarketer, telepresence, telepresence robot, Tesla Model S, The Future of Employment, Tim Cook: Apple, trade route, Travis Kalanick, Turing complete, Turing test, uber lyft, undersea cable, urban sprawl, V2 rocket, Watson beat the top human players on Jeopardy!, white picket fence, WikiLeaks

Fearing an explosion of anonymous illegal transactions across the blockchain, such as those that made the dark web e-commerce trading site Silk Road possible, regulators around the world attempted to rein in Bitcoin’s explosive growth. Bitcoin, however, is decentralised so it is impossible to block it or stop it without effectively pulling the plug on the entire Internet, which would seem like overkill. The only way to regulate Bitcoin’s activity was to control how people bought, sold and traded BTC,12 or how they converted other currencies into bitcoin through exchanges. The way regulators eventually cracked down on this in places like the United States, China and Russia was to make unlicensed bitcoin exchanges illegal. You could not buy, sell or trade in bitcoins unless the exchange was a licensed money transmitter or financial services business. This enabled the regulator to ensure that each user or owner of a Bitcoin wallet had his identity verified as per the traditional banking system.

This enabled the regulator to ensure that each user or owner of a Bitcoin wallet had his identity verified as per the traditional banking system. The motivation was twofold: identify users of the Bitcoin system/currency and prevent criminal money laundering systems from circumventing existing controls. At the core of Bitcoin is a decentralised ledger system that means that no one person, organisation or government controls the way Bitcoin works. There are only a few thousand Bitcoin nodes,13 but the distributed ledger system that allocates the millions of bitcoins around the world is constantly syncing and updating the records of digital currency moving from one wallet to another. For the same reason that regulators generally don’t like the Bitcoin system, i.e. a wallet functioning independent of the wallet holder’s identity, it makes the blockchain or something similar, much better suited to the future of money.

If not for those needs, my guess is that Bitcoin would never have emerged, just as paper money would not have emerged without clear drivers back in the 17th century. Paper money can still compete today, but in an increasingly digital world, it might very well find itself outclassed by new, more efficient methods of payments in the form of mobile phones, lower friction transmission mediums and more relevant global community value exchanges like Bitcoin. Will Bitcoin become the new global form of currency? It’s extremely unlikely given its recent volatility; however, our eyes have been opened to new possibilities in terms of commerce and we can be sure that Bitcoin won’t be the last attempt that we’ll see at developing Money 2.0. The more interesting development emerging out of the Bitcoin movement is actually the technology that underpins the way Bitcoin is transacted and recorded.


pages: 135 words: 26,407

How to DeFi by Coingecko, Darren Lau, Sze Jin Teh, Kristian Kho, Erina Azmi, Tm Lee, Bobby Ong

algorithmic trading, asset allocation, Bernie Madoff, bitcoin, blockchain, buy and hold, capital controls, collapse of Lehman Brothers, cryptocurrency, distributed ledger, diversification, Ethereum, ethereum blockchain, fiat currency, Firefox, information retrieval, litecoin, margin call, new economy, passive income, payday loans, peer-to-peer, prediction markets, QR code, reserve currency, smart contracts, tulip mania, two-sided market

Synthetix tracks real-world asset prices by utilizing the services of Chainlink, a smart contract oracle that obtains price feed from several trusted third party sources to prevent tampering. An example of an Inverse Synthetic Asset is Inverse Bitcoin (iBTC) which tracks the inverse price performance of Bitcoin. There are 3 key values related to each Inverse Synths - the entry price, lower limit, and upper limit. Let’s consider Inverse Synthetic Bitcoin (iBTC) as an example. Assume that at the time of creation, Bitcoin (BTC) is priced at $10,600 - this will be the entry price. If Bitcoin moves down $400 to $10,200, the iBTC Synth will now be worth an additional $400 and will be priced at $11,000. The opposite will also be true. If Bitcoin moves up to $11,000, the iBTC Synth will now be worth $10,200. Inverse Synths trade in a range with a 50% upper and lower limit from the entry price.

As a result of this, the black market demand for the USD has risen, causing the exchange rate to be approximately 30% higher than the officially declared rate by the government.18 Besides placing a limit on purchases, the Central Bank of Argentina also exposed 800 citizens’ names, ID number and tax identification because they exceeded the previous purchase limit of $10,000.19 Furthermore, Argentinians who work for foreign companies and are invoiced in USD must liquidate their USD to Argentine Peso within 5 days. According to Mariano, several years ago, many Argentinian freelancers preferred getting paid in Bitcoin. While this worked well in the earlier years prior to 2018 when Bitcoin price was on an uptrend, as the market turned downwards, there was an urgent need to convert Bitcoin immediately to Argentine Peso otherwise their salary will be greatly reduced. While Bitcoin provided many Argentinians with an alternative way of being paid, the volatile nature of Bitcoin meant that there was a need for “better money”. For Mariano, DAI is the solution to this problem as it has all the advantages of cryptocurrencies while staying pegged to the USD. But what does he do with his DAI? Once a month, he withdraws the bare minimum to pay for items like rent, groceries and credit card bill, keeping his Argentine Peso balance as close to 0 as possible.

Whenever a certain condition is fulfilled, the smart contract will carry out the operation as programmed. Multiple smart contracts are combined to operate with each other, which would be known as decentralized application (Dapp) in order to fulfill more complex processes and computation. ~ What is Ether (ETH)? Ether is the native currency of the Ethereum blockchain. It is like money and can be used for everyday transactions similar to Bitcoin. You can send Ether to another person to purchase goods and services based on the current market value. The Ethereum blockchain records the transfer and ensures the finality of the transaction. Besides that, Ether is also used to pay for the fee that allows smart contracts and Dapps to run on the Ethereum network. You can think of executing smart contracts on the Ethereum network as driving a car.


pages: 390 words: 109,870

Radicals Chasing Utopia: Inside the Rogue Movements Trying to Change the World by Jamie Bartlett

Andrew Keen, back-to-the-land, Bernie Sanders, bitcoin, blockchain, blue-collar work, Boris Johnson, brain emulation, centre right, clean water, cryptocurrency, Donald Trump, drone strike, Elon Musk, energy security, Ethereum, ethereum blockchain, failed state, gig economy, hydraulic fracturing, income inequality, Intergovernmental Panel on Climate Change (IPCC), Jaron Lanier, job automation, John Markoff, Joseph Schumpeter, Kickstarter, life extension, Occupy movement, off grid, Peter Thiel, post-industrial society, postnationalism / post nation state, precariat, QR code, Ray Kurzweil, RFID, Rosa Parks, Ross Ulbricht, Satoshi Nakamoto, self-driving car, Silicon Valley, Silicon Valley startup, Skype, smart contracts, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, technoutopianism

Afghanistan—and then a similar experience working in Libya with rebels fighting Gaddafi—turned her into a fully committed anarchist who thought state power was the root of most of the world’s problems.17 In 2013 a former US military employee told her about bitcoin, and she immediately thought that it was a way to circumnavigate the state entirely. Bitcoin, which was invented in 2009, is digital cash, just a string of numbers. Anyone can download a bitcoin wallet or QR code on to their computer or phone, buy bitcoins with traditional currency from a currency exchange and use them to buy or sell a growing number of products and services as easily as sending an email. Transactions are secure, fast and free, with no central authority controlling value or supply, and no middlemen taking a slice. You don’t even have to give your real name to start up an account. Bitcoin wrestles control of the money supply away from the state. There is a cap on the total number of bitcoins that can ever be produced: 21 million. New bitcoins are not minted by any central authority.

New bitcoins are not minted by any central authority. Instead, anyone who dedicates their computing power to verifying the transactions competes to earn a very small number of new bitcoins each time they do so (this is called ‘mining’). As more bitcoins are created (approximately 14 million have been created so far), the remaining bitcoins require more computing power to mine.* The last bitcoin is expected to be mined around 2140. It wasn’t bitcoin itself that excited Susanne, but the way bitcoin stored information. It works because a copy of every transaction between users is stored on a public, chronologically ordered database, called the ‘blockchain’.18 A copy of that database is hosted on thousands of computers, and new transactions can only be added to that database once they’ve been verified by other computers that check them.

Many people assume bitcoin to be completely decentralised, but if a miner, or a group of miners, controlled over half the computing power that works on verifying the transaction, it could feasibly force a change on the blockchain transaction list however it wished, create a fork of the blockchain, and all the other computers would start to work on the new version (the protocol is written so that all computers work from the longest blockchain). In bitcoin, a few large pools can register most of the new bitcoin blocks, which could push them to the 51 per cent threshold for mining power: which could result in a takeover. Indeed, in 2014 one mining rig took over 51 per cent of bitcoin’s hashing power for twelve straight hours. One of bitcoin’s goals was to be a free system, independent of anyone’s control. With small pools, no one has this kind of control. There is also an environmental problem. With no other way to establish whether miners are bona fide, the bitcoin architecture forces them to do a lot of hard computing; this ‘proof of work’, without which there can be no reward, insures that all concerned have skin in the game.


pages: 121 words: 36,908

Four Futures: Life After Capitalism by Peter Frase

Airbnb, basic income, bitcoin, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, cryptocurrency, deindustrialization, Edward Snowden, Erik Brynjolfsson, Ferguson, Missouri, fixed income, full employment, future of work, high net worth, income inequality, industrial robot, informal economy, Intergovernmental Panel on Climate Change (IPCC), iterative process, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, litecoin, mass incarceration, means of production, Occupy movement, pattern recognition, peak oil, plutocrats, Plutocrats, post-work, postindustrial economy, price mechanism, private military company, Ray Kurzweil, Robert Gordon, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart meter, TaskRabbit, technoutopianism, The Future of Employment, Thomas Malthus, Tyler Cowen: Great Stagnation, universal basic income, Wall-E, Watson beat the top human players on Jeopardy!, We are the 99%, Wolfgang Streeck

This means it must mediate exchanges of physical goods and services and be a store of value that can make claims on those goods and services. In other words, in order to convince people to take Bitcoins as payment, you have to convince them that Bitcoins are worth something and will continue to be worth something in the future. Many Bitcoin evangelists believe that because it is not created or regulated by the state, Bitcoins are somehow a more stable store of value. This quixotic fixation—little different, in substance, from an older generation of cranks’ obsession with the gold standard—has led the Bitcoin subculture to naïvely recapitulate the unregulated financial systems of the nineteenth century, with all their crises, crashes, swindles, and panics. The wild fluctuations in the currency’s value belie the Bitcoiners’ faith, as does the fact that several prominent Bitcoin exchanges have collapsed and made off with their clients’ wealth, leaving their victims with no recourse, a consequence of the lack of standards and regulation.

The authors of the study quipped that Wikipedia had become “the encyclopedia that anyone who understands the norms, socializes him or herself, dodges the impersonal wall of semi-automated rejection and still wants to voluntarily contribute his or her time and energy can edit.”28 Bitcoins, Doges, and Whuffie A contemporary reader of Doctorow’s book may find that the concept of “Whuffie” resonates more than it used to, because of the renewed prominence of invented nonstate currencies—in particular, the distributed cryptocurrency Bitcoin. As an accounting system that maintains an artificially scarce points system that is nevertheless not tied to the traditional money and banking system, it is of some limited economic interest. But it turns out that Bitcoin, for all its media hype, may be less significant than some other alternative currencies that currently lack its pretentions. The partisans of Bitcoin aspire for it to substitute for capitalist money. This means it must mediate exchanges of physical goods and services and be a store of value that can make claims on those goods and services.

And the same may be true of Dogecoin, which was launched at the peak of both Bitcoin and Doge’s popularity in late 2013. Yet the community that arose around it tells us something important about the real significance of the entire class of alternative moneys. Measured in terms of its value in US dollars, Dogecoin never threatened Bitcoin. But that was never relevant for the currency’s core use. Within a few months of its inception, there were more daily unique transactions in Doges than Satoshis (as Bitcoins were sometimes called in homage to their mysterious inventor).29 And that’s because Dogecoin satisfied a need for a different kind of currency, far removed from the traditional capitalist sort and in fact more similar to Whuffie. Technically, Dogecoin and Bitcoin are nearly identical, but that’s a misleading picture of Dogecoin’s significance.


pages: 182 words: 53,802

The Production of Money: How to Break the Power of Banks by Ann Pettifor

Ben Bernanke: helicopter money, Bernie Madoff, Bernie Sanders, bitcoin, blockchain, borderless world, Bretton Woods, capital controls, Carmen Reinhart, central bank independence, clean water, credit crunch, Credit Default Swap, cryptocurrency, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, distributed ledger, Donald Trump, eurozone crisis, fiat currency, financial deregulation, financial innovation, financial intermediation, financial repression, fixed income, Fractional reserve banking, full employment, Hyman Minsky, inflation targeting, interest rate derivative, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, light touch regulation, London Interbank Offered Rate, market fundamentalism, Martin Wolf, mobile money, Naomi Klein, neoliberal agenda, offshore financial centre, Paul Samuelson, Ponzi scheme, pushing on a string, quantitative easing, rent-seeking, Satyajit Das, savings glut, secular stagnation, The Chicago School, the market place, Thomas Malthus, Tobin tax, too big to fail

It helps create activity – artistic, scientific, practical or therapeutic. The bitcoin mania Bitcoins have introduced millions of people to a currency that appeared from nowhere and is, apparently, ‘cryptographic proof’. Whereas private banks can create money by a stroke of the keyboard, the creation of bitcoins involves vast amounts of computer processing power. This power is capable of deploying a complicated algorithm that approximates the effort of ‘mining’ coins.24 The bitcoins so mined have become the new gold and bit-coiners the new goldbugs. This new currency (which claims to be a commodity) is a form of peer-to-peer exchange. Its life began in the murky world of Silk Road, an online black market on the deep web, and has generated a great deal of excitement. It was created by an unknown computer scientist – the first bitcoin miner. It is now used for international payments, but also for speculative purposes.

Like other virtual currencies, bitcoin has theoretical roots in the Austrian school of economics. Its advocates are keen followers of Friedrich von Hayek, and cite as inspiration his book, Denationalisation of Money, in which he calls for the production, distribution and management of money to be left to the ‘invisible hand’, so as to end the oversight of regulatory democracy.25 There are two things striking about this new currency. First, its creators (who are computer programmers) have apparently ensured that there can never be more than 21 million coins in existence. (Although bitcoins can be divided into smaller units: the millibitcoin, microbitcoin and satoshi. Satoshi is the smallest amount, representing 0.00000001 bitcoin, one hundred millionth of a bitcoin.) Bitcoin is therefore like gold: its value lies in its scarcity.

One commentator notes that ‘bitcoin was conceived as a currency that did not require any trust between its users’.26 Equally, its scarcity means that, unlike the endless and myriad social and economic relationships created by credit, the capacity of bitcoin to generate economic activity is limited (to 21 million coins). The currency’s architects deliberately limited the amount of bitcoins in order ostensibly to prevent inflation. In reality, the purpose is to ratchet up the value of bitcoins, most of which are owned by originators of the scheme. In this sense, bitcoin miners are no different from goldbugs talking up the value of of a finite quantity of gold, from tulip growers talking up the price of rare tulips in the seventeenth century, or from Bernard Madoff talking up his fraudulent Ponzi scheme. However, some have hyped up the technology used by bitcoin – blockchain, a distributed database or ledger – and argued that it could revolutionise the distribution of wealth and provide transparent accounts of transactions.


Data and the City by Rob Kitchin,Tracey P. Lauriault,Gavin McArdle

A Declaration of the Independence of Cyberspace, bike sharing scheme, bitcoin, blockchain, Bretton Woods, Chelsea Manning, citizen journalism, Claude Shannon: information theory, clean water, cloud computing, complexity theory, conceptual framework, corporate governance, correlation does not imply causation, create, read, update, delete, crowdsourcing, cryptocurrency, dematerialisation, digital map, distributed ledger, fault tolerance, fiat currency, Filter Bubble, floating exchange rates, global value chain, Google Earth, hive mind, Internet of things, Kickstarter, knowledge economy, lifelogging, linked data, loose coupling, new economy, New Urbanism, Nicholas Carr, open economy, openstreetmap, packet switching, pattern recognition, performance metric, place-making, RAND corporation, RFID, Richard Florida, ride hailing / ride sharing, semantic web, sentiment analysis, sharing economy, Silicon Valley, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, smart contracts, smart grid, smart meter, social graph, software studies, statistical model, TaskRabbit, text mining, The Chicago School, The Death and Life of Great American Cities, the market place, the medium is the message, the scientific method, Toyota Production System, urban planning, urban sprawl, web application

Maxwell and L. Pschetz Ledger 1: money, time and the blockchain There are many elements that make Bitcoin an interesting alternative currency, but critically it is the development and implementation of the blockchain – a distributed ledger that contains all transaction records ever conducted. The Bitcoin blockchain is an encrypted, cumulative ledger composed of ‘blocks’ of transactions that are verified by miners and which lead back to the first ‘Genesis’ block whose instance is timed as 18:15:05 GMT, on 3 January 2009, signifying the start of the currency. Blocks can contain the social, economic and geographic information about the senders and receivers of Bitcoin wallets, time of transaction, amount of Bitcoins being transferred, fees and IP addresses from which location can also be identified. Transaction blocks are generated approximately every 10 minutes, a timing that is calibrated by the network – if blocks are completed quicker, the difficulty of the mining is increased, and vice versa.

Once released into a system, the use of individual monies was not monitored or tracked – only the health of the system. In this way, there are significant differences with Bitcoin and its reliance on a blockchain. Given the nature of digital systems, perfect copies of money are conceptually even easier to make than the counterfeiting of physical money. The radical invention of the blockchain uses multiple copies of a single ledger distributed across a network to deal with the ‘double spending’ potential of digital money, that is, duplicating currency and spending it twice or more, is a central feature to the Bitcoin platform. In fiat currencies, third parties, for example, banks, balance the books at the close of each trading day. In Bitcoin, ‘double spend’ is prevented by ensuring digital scarcity through the verification of transactions through the mining process and transaction blocks.

This pattern from materialist desires toward social projects reoccurs as participants place increasing faith in the trusted ledger, and for the two groups it provided the stimulus for two distinct iterations of the GeoCoin software. Civic Blocks (Project Team: Dorota Kamrowska-Zaluska, Hanna Obracht-Prondzynska, Eileen Wagner) Civic Blocks transposed the value of a fraction of a Bitcoin into a vote for how a City Council should spend a proportion of its budget. The team suggested that a City Council could convert a proportion of its capital resource budget into Bitcoin, perhaps 10 per cent. Using the unique capabilities of Bitcoins to divide them into Figure 11.2 S creenshot taken from smartphone displaying the Civic Blocks software in use. The position of the user is denoted by the marker who is spending their vote/coins on a bicycle rack project. 152 C. Speed, D. Maxwell and L. Pschetz fractions, 10 per cent of the budget would be distributed to all citizens of a city that are eligible to vote.


pages: 282 words: 81,873

Live Work Work Work Die: A Journey Into the Savage Heart of Silicon Valley by Corey Pein

23andMe, 4chan, affirmative action, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, Anne Wojcicki, artificial general intelligence, bank run, barriers to entry, Benevolent Dictator For Life (BDFL), Bernie Sanders, bitcoin, Build a better mousetrap, California gold rush, cashless society, colonial rule, computer age, cryptocurrency, data is the new oil, disruptive innovation, Donald Trump, Douglas Hofstadter, Elon Musk, Extropian, gig economy, Google bus, Google Glasses, Google X / Alphabet X, hacker house, hive mind, illegal immigration, immigration reform, Internet of things, invisible hand, Isaac Newton, Jeff Bezos, job automation, Kevin Kelly, Khan Academy, Law of Accelerating Returns, Lean Startup, life extension, Lyft, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, Menlo Park, minimum viable product, move fast and break things, move fast and break things, mutually assured destruction, obamacare, passive income, patent troll, Paul Graham, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, Peter Thiel, platform as a service, plutocrats, Plutocrats, Ponzi scheme, post-work, Ray Kurzweil, regulatory arbitrage, rent control, RFID, Robert Mercer, rolodex, Ronald Reagan, Ross Ulbricht, Ruby on Rails, Sam Altman, Sand Hill Road, Scientific racism, self-driving car, sharing economy, side project, Silicon Valley, Silicon Valley startup, Singularitarianism, Skype, Snapchat, social software, software as a service, source of truth, South of Market, San Francisco, Startup school, stealth mode startup, Steve Jobs, Steve Wozniak, TaskRabbit, technological singularity, technoutopianism, telepresence, too big to fail, Travis Kalanick, tulip mania, Uber for X, uber lyft, ubercab, upwardly mobile, Vernor Vinge, X Prize, Y Combinator

But then Kenna caught a lucky break by acting on his preoccupations—cryptography, “alternative finance,” libertarian politics, and economic collapse. Kenna accumulated a small hoard of Bitcoin when it was virtually worthless. In 2011, he launched a Bitcoin exchange, Tradehill, from an office on the beach in Chile. His cofounders included New York bankers and a former senior engineer from Elon Musk’s SpaceX. By 2013, when the goldbugs, money launderers, and Wall Street speculators joined the Bitcoin frenzy, Kenna had become a charter member of the “Bitcoin millionaires’ club,” and his distaste for “unethical” business practices had evolved. He now argued that the marketing of Ponzi schemes should be permitted so long as the terms were clearly stated. It was all in good fun, like a friendly game of poker. Of course, Bitcoin itself was a Ponzi scheme. As with so many other Bitcoin companies before it, Tradehill collapsed in a morass of litigation.

The paper said 20Mission was a 41-room complex founded by Bitcoin trader and entrepreneur Jered Kenna, who recruited an international group of start-up founders and artists to coexist there. With a chicken coop, shared kitchen, and commanding view of the city’s downtown, it has the feel of university student housing—the residents are young, the parties are crowded, the idealism is embedded in the architecture. And here’s another perk: [the owner] accepts rent in Bitcoin. It sounded ideal. I didn’t have any Bitcoins, but they couldn’t be harder to come by than real money. As I researched further, it turned out 20Mission was so central to the San Francisco cryptocurrency scene that the Bitcoin Trader blog—an authoritative source on such matters—nicknamed it Bitcoin’s Hogwarts. Keen to make a good impression, I looked up the owner, Jered Kenna.

Kenna was “pulling my hair out … not sleeping,” and once more left holding the bag. “I was, like, completely broke and I needed somewhere to live in San Francisco, which is horrible,” Kenna recalled in a video interview with a Bitcoin blogger. “I talked to a friend of mine and he said, ‘Well there’s this old crackhouse that you could get a good deal on, but it’s terrible.’ I said, ‘OK that sounds perfect.’” Kenna took over the lease and persuaded friends to rent rooms there for $800 a month. Thus 20Mission was born. After a couple of years, Kenna followed his girlfriend to Colombia, where he opened another hacker hostel and a brewery. He hadn’t conquered the world, but neither had he gone to prison. For a Bitcoin trader, that wasn’t bad. In a promotional video for 20Mission targeting potential tenants and investors, the owner explained the building’s phoenixlike transformation from “an old hotel for crackheads and homeless people” to “a live-space for tech people” and, ultimately, a self-sustaining locus of revolutionary innovation, running on untaxable digital drug dollars and laissez-faire spirit.


pages: 677 words: 206,548

Future Crimes: Everything Is Connected, Everyone Is Vulnerable and What We Can Do About It by Marc Goodman

23andMe, 3D printing, active measures, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, airport security, Albert Einstein, algorithmic trading, artificial general intelligence, Asilomar, Asilomar Conference on Recombinant DNA, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, Bill Joy: nanobots, bitcoin, Black Swan, blockchain, borderless world, Brian Krebs, business process, butterfly effect, call centre, Charles Lindbergh, Chelsea Manning, cloud computing, cognitive dissonance, computer vision, connected car, corporate governance, crowdsourcing, cryptocurrency, data acquisition, data is the new oil, Dean Kamen, disintermediation, don't be evil, double helix, Downton Abbey, drone strike, Edward Snowden, Elon Musk, Erik Brynjolfsson, Filter Bubble, Firefox, Flash crash, future of work, game design, global pandemic, Google Chrome, Google Earth, Google Glasses, Gordon Gekko, high net worth, High speed trading, hive mind, Howard Rheingold, hypertext link, illegal immigration, impulse control, industrial robot, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Jaron Lanier, Jeff Bezos, job automation, John Harrison: Longitude, John Markoff, Joi Ito, Jony Ive, Julian Assange, Kevin Kelly, Khan Academy, Kickstarter, knowledge worker, Kuwabatake Sanjuro: assassination market, Law of Accelerating Returns, Lean Startup, license plate recognition, lifelogging, litecoin, low earth orbit, M-Pesa, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Metcalfe’s law, MITM: man-in-the-middle, mobile money, more computing power than Apollo, move fast and break things, move fast and break things, Nate Silver, national security letter, natural language processing, obamacare, Occupy movement, Oculus Rift, off grid, offshore financial centre, optical character recognition, Parag Khanna, pattern recognition, peer-to-peer, personalized medicine, Peter H. Diamandis: Planetary Resources, Peter Thiel, pre–internet, RAND corporation, ransomware, Ray Kurzweil, refrigerator car, RFID, ride hailing / ride sharing, Rodney Brooks, Ross Ulbricht, Satoshi Nakamoto, Second Machine Age, security theater, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, Skype, smart cities, smart grid, smart meter, Snapchat, social graph, software as a service, speech recognition, stealth mode startup, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, Stuxnet, supply-chain management, technological singularity, telepresence, telepresence robot, Tesla Model S, The Future of Employment, The Wisdom of Crowds, Tim Cook: Apple, trade route, uranium enrichment, Wall-E, Watson beat the top human players on Jeopardy!, Wave and Pay, We are Anonymous. We are Legion, web application, Westphalian system, WikiLeaks, Y Combinator, zero day

The system is designed to ensure no more than twenty-one million Bitcoins are ever generated, thereby preventing a central authority from flooding the market with new Bitcoins. Most people purchase Bitcoins on third-party exchanges with traditional currencies, such as dollars or euros, or with credit cards. The exchange rates against the dollar for Bitcoin fluctuate wildly and have ranged from fifty cents per coin around the time of its introduction to over $1,240 in November 2013. People can send Bitcoins to each other using computers or mobile apps, where coins are stored in “digital wallets.” Bitcoins can be directly exchanged between users anywhere in the world using unique alphanumeric identifiers, akin to e-mail addresses, and there are no transaction fees. Anytime a purchase takes place, it is recorded in a public ledger known as the “blockchain,” which ensures no duplicate transactions are permitted. Bitcoin is the world’s largest crypto currency, so-called because it uses “cryptography to regulate the creation and transfer of money, rather than relying on central authorities.”

,” io9, March 26, 2012. 47 “I will sell my kidney”: Dan Bilefsky, “Black Market for Body Parts Spreads in Europe,” New York Times, June 28, 2012. 48 “Donate a kidney”: Denis Campbell and Nicola Davison, “Illegal Kidney Trade Booms as New Organ Is ‘Sold Every Hour,’ ” Guardian, May 27, 2012. 49 At least one seventeen-year-old: “9 on Trial in China over Teenager’s Sale of Kidney for iPad and iPhone,” CNN, Aug. 10, 2012. 50 In a deeply disturbing report: European Cybercrime Centre, “Commercial Sexual Exploitation of Children Online,” Oct. 2013. 51 Organized criminal networks: Paul Gallagher, “Live Streamed Videos of Abuse and Pay-per-View Child Rape Among ‘Disturbing’ Cybercrime Trends, Europol Report Reveals,” Independent, Oct. 16, 2013; Paul Peachey, “Number of UK Paedophiles ‘Live-Streaming’ Child Abuse Films Soars, Warns CEOP,” Independent, July 1, 2013. 52 In one incident: Ann Cahill, “New Age of Cybercrime: Live Child Rapes, Sextortion, and Advanced Malware,” Irish Examiner, Feb. 11, 2014. 53 The system is designed: “How Does Bitcoin Work?,” Economist, April 11, 2013. 54 Bitcoin is the world’s largest: Nick Farrell, “Understanding Bitcoin and Crypto Currency,” Tech Radar, April 7, 2014. 55 Because Bitcoin can be spent: Joshua Brustein, “Bitcoin May Not Be So Anonymous, After All,” Bloomberg Businessweek, Aug. 27, 2013. 56 There are now more than seventy: Alan Yu, “How Virtual Currency Could Make It Easier to Move Money,” NPR.​org, Jan. 15, 2014. 57 Hackers have been able to steal: Robin Sidel, Eleanor Warnock, and Takashi Mochizuki, “Almost Half a Billion Worth of Bitcoins Vanish,” Wall Street Journal, March 1, 2014. 58 Beyond crypto currencies: Marc Santora, William K. Rashbaum, and Nicole Perlroth, “Liberty Reserve Operators Accused of Money Laundering,” New York Times, May 28, 2013. 59 Known as the “PayPal”: United States Attorney’s Office of Southern New York, “Liberty Reserve Information Technology Manager Pleads Guilty in Manhattan Federal Court,” United States Department of Justice press release, Sept. 23, 2014. 60 The popularity of Darkcoin: Andy Greenberg, “Darkcoin, the Shadowy Cousin of Bitcoin, Is Booming,” Wired, May 21, 2014. 61 Operating under the motto: Andy Greenberg, “ ‘Dark Wallet’ Is About to Make Bitcoin Money Laundering Easier Than Ever,” Wired, April 29, 2014. 62 One such CaaS company: James Vincent, “Irish Man Arrested as ‘the Largest Facilitator of Child Porn on the Planet,’ ” Independent, Aug. 5, 2013. 63 Hundreds of crime-trepreneur purveyors: Kevin Poulsen, “FBI Admits It Controlled Tor Servers Behind Mass Malware Attack,” Wired, Sept. 13, 2013. 64 The trend is accelerating: Solutionary, an NTT Group Security Company, Security Engineering Research Team (SERT) Quarterly Threat Intelligence Report, 2013, 8, http://​www.​solutionary.​com. 65 For example, the hackers: Ibid. 66 Today, using the distributed computing power: “Cybercriminals Today Mirror Legitimate Business Processes,” 4. 67 This means that anyone: Simson Garfinkel, “The Criminal Cloud,” MIT Technology Review, Oct. 17, 2011. 68 “private organisation”: Misha Glenny, DarkMarket: Cyberthieves, Cybercops, and You (New York: Knopf, 2011), 203. 69 China’s Hidden Lynx: Danny Yadron, “Symantec Fingers Most Advanced Chinese Hacker Group,” Digits (blog), Wall Street Journal, Sept. 17, 2013. 70 Off duty, however: Kim Zetter, “State-Sponsored Hacker Gang Has a Side Gig in Fraud,” Wired, Sept. 17, 2013. 71 Staffed 24/7: Kim Zetter, “Cops Pull Plug on Rent-a-Fraudster Service for Bank Thieves,” Wired, April 19, 2010. 72 As a result, less skilled criminals: Ablon, Libicki, and Golay, “Markets for Cybercrime Tools and Stolen Data,” 4. 73 Vendors offer one-stop shopping: Forward-Looking Threat Research Team, “Deepweb and Cybercrime,” 9; Ablon, Libicki, and Golay, “Markets for Cybercrime Tools and Stolen Data,” 4. 214 As an example: Taylor Armerding, “Dark Web: An Ever-More-Comfortable Haven for Cyber Criminals,” CSO Online, March 28, 2014. 74 Over the years: Donna Leinwand Leger and Anna Arutunyan, “How the Feds Brought Down a Notorious Russian Hacker,” USA Today, March 5, 2014. 75 When they did: Dan Raywood, “New Version of Bugat Trojan Was Payload in LinkedIn Spam and Not Zeus,” SC Magazine UK, Oct. 12, 2010. 76 Once it found it: Robert McMillan, “New Russian Botnet Tries to Kill Rival,” Computerworld, Feb. 9, 2010. 77 Like its rival Zeus: Kurt Eichenwald, “The $500,000,000 Cyber-Heist,” Newsweek, March 13, 2014. 78 The tool, perhaps one of the world’s most popular: Gregory J.

., a trend that is accelerating thanks to new forms of illicit finance that greatly facilitate its clandestine business operations. Dark Coins Bitcoin’s got its issues. But it is not competing with perfection. DAN KAMINSKY, SECURITY RESEARCHER Technology is enabling new forms of money, and the growing digital economy holds great promise to provide new financial tools, especially to the world’s poor and unbanked. These emerging virtual currencies are often anonymous and none have received quite as much press as Bitcoin, a decentralized peer-to-peer digital form of money. Bitcoins were invented in 2009 by a mysterious person (or group of people) using the alias Satoshi Nakamoto, and the coins are created or “mined” by solving increasingly difficult mathematical equations, requiring extensive computing power. The system is designed to ensure no more than twenty-one million Bitcoins are ever generated, thereby preventing a central authority from flooding the market with new Bitcoins.


pages: 382 words: 120,064

Bank 3.0: Why Banking Is No Longer Somewhere You Go but Something You Do by Brett King

3D printing, additive manufacturing, Airbus A320, Albert Einstein, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, asset-backed security, augmented reality, barriers to entry, bitcoin, bounce rate, business intelligence, business process, business process outsourcing, call centre, capital controls, citizen journalism, Clayton Christensen, cloud computing, credit crunch, crowdsourcing, disintermediation, en.wikipedia.org, fixed income, George Gilder, Google Glasses, high net worth, I think there is a world market for maybe five computers, Infrastructure as a Service, invention of the printing press, Jeff Bezos, jimmy wales, Kickstarter, London Interbank Offered Rate, M-Pesa, Mark Zuckerberg, mass affluent, Metcalfe’s law, microcredit, mobile money, more computing power than Apollo, Northern Rock, Occupy movement, optical character recognition, peer-to-peer, performance metric, Pingit, platform as a service, QR code, QWERTY keyboard, Ray Kurzweil, recommendation engine, RFID, risk tolerance, Robert Metcalfe, self-driving car, Skype, speech recognition, stem cell, telepresence, Tim Cook: Apple, transaction costs, underbanked, US Airways Flight 1549, web application

Instead of enabling merchants to process credit card payments from Visa or MasterCard, Bitcoin bypasses the system entirely in favour of device-to-device transactions using near-field communications technology. Bitcoin’s new currency doesn’t require a third-party processor or a plug-in dongle. Because of this, Bitcoin can afford to charge users much less per transaction. At the moment, the average Bitcoin transaction fee is 0.99 per cent, while Square and PayPal’s processing apps charge 2.75 per cent and 2.7 per cent per swipe of your credit card. Like any currency, Bitcoins can also be exchanged for US dollars through a processing service. As of 11 April 2011, the going rate was round $4.90 per Bitcoin. In Africa, where inflation is out of control, many merchants are choosing to hang on to their Bitcoins so that they don’t have to push around wheelbarrows full of $100-billion notes. They’re looking at a rival currency to hold their assets, and it isn’t always the US dollar or euro.

There’s been a lot of discussion around the fact that Bitcoin’s anonymity enables the facilitation of illegal activities, money laundering and the like. Admittedly it is well suited to such abuse only because it is a totally open and community-regulated currency. However, suspicious transactions will still get flagged by the traditional banking system when cash is put into or taken out of the Bitcoin economy. So what’s holding Bitcoin back from shaking up the global economy and becoming a true rival currency, especially in the digital payments space? Security is the main concern. Unlike your credit card or existing bank accounts in the system, Bitcoin currently provides no protection or compensation in the event of fraud. Recently, a hacker managed to raid several Bitcoin accounts around the world and got away with $228,845.20 While current technology would enable tracking of IP activity around trades and the flow of Bitcoins, in the current instance of fraud, the weak link was the Bitcoin exchange, which didn’t have the monitoring tools in place to track the hack.

“Increasingly, these virtual economies are leading to real money trades,” notes Hunter, one of a handful of academics closely following this trend. Bitcoin is an experimental new digital currency that enables instant payments to anyone, anywhere in the world. It uses peer-to-peer technology to operate, with no central authority, managing transactions and issuing money are carried out collectively by the network. Bitcoin is also the name of the open-source software that enables the use of this innovative virtual currency. Over the past few years, the peer-to-peer currency it has created has gained a surprising foothold in the global market. There are now multiple Bitcoin-processing apps for Android and the iPhone, as well as an online payment system similar to PayPal. Instead of enabling merchants to process credit card payments from Visa or MasterCard, Bitcoin bypasses the system entirely in favour of device-to-device transactions using near-field communications technology.


pages: 325 words: 90,659

Narconomics: How to Run a Drug Cartel by Tom Wainwright

Airbnb, barriers to entry, bitcoin, business process, call centre, collateralized debt obligation, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, failed state, financial innovation, illegal immigration, Mark Zuckerberg, microcredit, price mechanism, RAND corporation, Ronald Reagan, Sam Peltzman, Skype

The effect is to make a user’s web-browsing history as good as untraceable, which is handy if you are a political dissident, spy, investigative journalist—or drug dealer. Then there is the problem of how to pay. For this, there is Bitcoin. The world’s foremost digital currency system, Bitcoin works without a central bank, instead relying on networks of computers to generate new “coins” by performing complex mathematical operations in a process known as mining. Setting up a Bitcoin account is a bit of a hassle, but not particularly complicated and, like the TOR browser, the currency is perfectly legal to use. Bitcoin’s value is ludicrously volatile: its price shot up from less than $15 at the beginning of 2013 to nearly $1,000 in November of that year, before falling back to $300 by the end of 2014. But online shoppers can live with this because, like TOR, Bitcoin provides them with a cloak of anonymity. The combination of untraceable browsing and anonymous payments has enabled an online criminal market to flourish.

Others, apparently including Evolution, vanish when the people running them decide to pull a fast one. (Evolution’s managers are thought to have made off with some $15 million in Bitcoin payments kept in escrow when the site mysteriously vanished in 2015.) And all such sites depend on Bitcoin and TOR, both of which could be pulled from under their feet if the governments of the world decided to ban them. There is no sign of that for now. Germany’s finance ministry has recognized Bitcoin as a currency, meaning its users can be taxed. In the United States, the Winklevoss twins, the nearly men of the dotcom boom who claimed that Mark Zuckerberg had stolen the idea for Facebook from them, have poured money into creating a Bitcoin exchange. Most democratic governments have so far been reluctant to outlaw the TOR browser, on the basis that it has legitimate uses as well as nefarious ones.

One academic study of the goods for sale on the original Silk Road estimated that about one-fifth of all its listings were aimed at dealers, and that these “business-to-business” transactions accounted for between 31 percent and 45 percent of the site’s trades by value.3 If that is the case, even drug users who buy their supplies “offline,” from a dealer or friend, may well be buying a product that was traded online at an earlier stage in the supply chain. Measuring the total value of the online drug economy is hard, not least because Bitcoin’s price is so volatile. The FBI originally estimated that the Silk Road had done $1.2 billion in business during its two and one-half years online. But it later scaled down this rough calculation: the estimate had been made when Bitcoin’s value was near its peak, whereas much of the Silk Road’s business was done when the digital currency was less valuable. The FBI did a revised estimate, using the currency’s varying value at the time that each different trade was made, and came up with the much lower figure of $200 million.


pages: 478 words: 149,810

We Are Anonymous: Inside the Hacker World of LulzSec, Anonymous, and the Global Cyber Insurgency by Parmy Olson

4chan, Asperger Syndrome, bitcoin, call centre, Chelsea Manning, corporate governance, crowdsourcing, Firefox, hive mind, Julian Assange, Minecraft, MITM: man-in-the-middle, Occupy movement, peer-to-peer, pirate software, side project, Skype, speech recognition, Stephen Hawking, Stuxnet, We are Anonymous. We are Legion, We are the 99%, web application, WikiLeaks, zero day

Another more direct route, which Topiary often used, was to simply transfer money between a few different Bitcoin addresses: Bitcoin address 1 → Bitcoin address 2 → Bitcoin address 3 → Liberty Reserve (a Costa Rican payment processor) account → Bitcoin address 4 → Bitcoin address 5 → second Liberty Reserve account → PayPal account → bank account. If even the hint of a thought occurred to him that there weren’t enough transfers, he would add several more paths. Then on Monday, June 6, Topiary checked the LulzSec Bitcoin account. Holy shit, he thought. He was looking at a single, anonymous donation of four hundred Bitcoins, worth approximately $7,800. It was more money than Topiary had ever had in his life. He went straight into the core group’s secure chat room. “WHAT THE FUCK guys?!” he said, then pasted the Bitcoin details. “NO WAY,” said AVunit. “LOL.

Topiary started requesting donations for LulzSec and used Twitter and Pastebin to provide the thirty-one-digit number that acted as the group’s new Bitcoin address. Anyone could anonymously donate to their anonymous account if he converted money into the Bitcoin currency and made a transfer. Bitcoin was a digital currency that used peer-to-peer networking to make anonymous payments. It became increasingly popular around the same time LulzSec started hacking. By May, the currency’s value was up by a dollar from where it had been at the start of the year, to $8.70. A few days after soliciting donations, Topiary jokingly thanked a “mysterious benefactor who sent us 0.02 BitCoins. Your kindness will be used to fund terror of the highest quality.” He used Twitter to drop hints about whom LulzSec would hit next.

They started private messaging Topiary with their unique Bitcoin addresses so he could send them their shares. Topiary had no intention of keeping quiet about the money or cutting a bigger slice for himself. Everyone was funneling the money through various accounts to keep it from being traced. Who knew if the donation had come from the Feds or opportunistic military white hats? “Guys be safe with the Bitcoins please,” said AVunit. “Let it flow through a few gateways.…Use one bit to get out of financial trouble and then sit on the rest.” “Okay, beginning the sends,” Topiary said. “All of you are now $1,000 richer.” “Excuse me while I light up a victory cigar,” said Pwnsauce. “I’m just going to stare at it,” said Kayla. “Let it grow as Bitcoin progresses.” So volatile and popular was the value of the Bitcoin crypto currency that by the following day one Bitcoin had risen to $26 in value, making their big donation worth $11,000.


pages: 326 words: 103,170

The Seventh Sense: Power, Fortune, and Survival in the Age of Networks by Joshua Cooper Ramo

Airbnb, Albert Einstein, algorithmic trading, barriers to entry, Berlin Wall, bitcoin, British Empire, cloud computing, crowdsourcing, Danny Hillis, defense in depth, Deng Xiaoping, drone strike, Edward Snowden, Fall of the Berlin Wall, Firefox, Google Chrome, income inequality, Isaac Newton, Jeff Bezos, job automation, Joi Ito, market bubble, Menlo Park, Metcalfe’s law, Mitch Kapor, natural language processing, Network effects, Norbert Wiener, Oculus Rift, packet switching, Paul Graham, price stability, quantitative easing, RAND corporation, recommendation engine, Republic of Letters, Richard Feynman, road to serfdom, Robert Metcalfe, Sand Hill Road, secular stagnation, self-driving car, Silicon Valley, Skype, Snapchat, social web, sovereign wealth fund, Steve Jobs, Steve Wozniak, Stewart Brand, Stuxnet, superintelligent machines, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, too big to fail, Vernor Vinge, zero day

Today, the most talked-about model for an all-digital currency is Bitcoin, a system based on the algorithmic creation of money mined from computation much as gold was once mined from the hills of California. Bitcoin’s most appealing property is that it is not controlled by any government. It is meant to be free from political pressures, from the influence of central bankers, and from the risk of national default. If you’re an Indonesian farmer or an Estonian cabdriver, the thinking goes, better to store your money in BTC than local cash. Bitcoin is easy to keep and transmit, and Bitcoin transactions can be made anonymously—which has attracted drug lords and tax evaders and bred a Bitcoin-fueled black-market economy too. Bitcoin or something like it will have a role in our future, but another kind of digital currency will appear too, and it will form itself into a kind of gateland.

Bitcoin or something like it will have a role in our future, but another kind of digital currency will appear too, and it will form itself into a kind of gateland. Instead of being anonymous, backed only by algorithms, and unlinked to a government, as Bitcoin is, this currency will be built for reliability, not mystery. Bitcoin transactions are cloaked in secrecy; this new currency will be transparent, traceable. Bitcoin is free from government interference; this digital currency will be backed by a major government and tied intimately into policy and credit. Imagine that the United States began to issue Bitdollars—traceable, controllable digital currency backed by the security of America’s economic position. While many people might still prefer Bitcoins (or Bitrubles or Bityuan), the answer to the question What’s your safety currency? won’t change much just because you put the prefix “Bit” in front of it.

If you look at a kid with a phone and think strong, you have a feeling for the potential of a network. If you look at an angry, barely educated terrorist wannabe and think junior varsity, you don’t. And, as a result, you may be about to have a very unpleasant surprise. A friend who controls the largest secure Bitcoin vault in the world put it to me once this way: “Platforms mattered once; now it is protocols.” His point was that the pipes and rules connecting the varied systems of our world fundamentally affect the distribution of power. The rules of the Bitcoin block chain or the implications of an addressing protocol such as IPv6 reveal something about how we’ll all connect in the future. They are examples of how the pulling pressure of networks will become operational. Try this: Ball up your right hand into a fist. Take your left hand and open the fingers wide.


pages: 261 words: 86,905

How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester

asset allocation, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamonds, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, commoditize, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, financial innovation, Flash crash, forward guidance, Gini coefficient, global reserve currency, high net worth, High speed trading, hindsight bias, income inequality, inflation targeting, interest rate swap, Isaac Newton, Jaron Lanier, joint-stock company, joint-stock limited liability company, Kodak vs Instagram, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, negative equity, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, plutocrats, Plutocrats, Ponzi scheme, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Right to Buy, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Jobs, survivorship bias, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trickle-down economics, Washington Consensus, wealth creators, working poor, yield curve

If you’re wondering what Norway and Venuezuela have in common, the answer is nothing, except lots of oil. bitcoin An unregulated currency, created by someone or someones calling him, her, or themselves Satoshi Nakamoto, in 2008. It has no inherent value, so its worth depends entirely on the trust people have in it: in my view, that’s the most interesting thing about bitcoin, the fact it is a built-in lesson on the arbitrary nature of money values. Bitcoins are created by “mining,” i.e., by long slow computer calculations, and are stored and exchanged via digital “wallets.” This number crunching burns a lot of energy, and the cost of that energy is the real cost of creating bitcoins. The currency’s main use is in buying and selling things anonymously over the Internet, though there are also a few cafés and bars that take them.* The value of the bitcoin has gone up and down sharply in its short life.

.* The value of the bitcoin has gone up and down sharply in its short life. I’m writing this in March 2014: in the last few months the bitcoin has hit a high of over $1,200 and a low of $50. The currency lost 40 percent of its value in a single day, on 2 October 2013, when the FBI seized an illegal exchange called the Silk Road, where payment was taken in bitcoins—though it should be stressed that there is nothing illegal about bitcoins per se. In essence the bitcoin is (to quote the Economist) “a giant shared transaction ledger recording who owns each individual unit of the currency at any one time,” in which all transactions taking place in the currency are simultaneously visible to all its users. An interesting feature of the currency is how transparent it is: all bitcoin transactions are visible, though also anonymous—the combination of those two things is unusual.† Black-Scholes The name of the formula that made it possible to create prices in the derivatives markets; before the equation was discovered (or invented, depending on your view of what mathematics does), uncertainties about how probabilities changed made it impossible to create accurate prices for an option over time.

zombie bank A bank with so many dud assets on its books that it no longer functions as a lender, and at the same time is too big or politically important for anyone in power to admit the truth about its real position. Its condition is a form of living death, hence the name. In the debate between fast and slow zombies, zombie banks are as slow as it gets. * A list of businesses that take bitcoins is available at www.spendbitcoins.com/places/. † The current value of the currency is available at www.xe.com/currency/xbt-bitcoin, and the total number of bitcoins in circulation at blockexplorer.com/q/totalbc—today, the number is 11,888,600. Bitcoin’s FAQ, which I strongly recommend to anyone with an interest in the practical or theoretical questions raised by the currency, is at en.bitcoin.it/wiki/FAQ. Afterword So what are we going to do with these tools, with this economic language? Where are we heading? The answer: it’s up to us. The future direction of the world economy is not written in stone, and the same goes for those in the US and the UK and in the developed world more generally.


pages: 374 words: 97,288

The End of Ownership: Personal Property in the Digital Economy by Aaron Perzanowski, Jason Schultz

3D printing, Airbnb, anti-communist, barriers to entry, bitcoin, blockchain, carbon footprint, cloud computing, conceptual framework, crowdsourcing, cryptocurrency, Donald Trump, Edward Snowden, en.wikipedia.org, endowment effect, Firefox, George Akerlof, Hush-A-Phone, information asymmetry, intangible asset, Internet Archive, Internet of things, Isaac Newton, loss aversion, Marc Andreessen, means of production, minimum wage unemployment, new economy, peer-to-peer, price discrimination, Richard Thaler, ride hailing / ride sharing, rolodex, self-driving car, sharing economy, Silicon Valley, software as a service, software patent, software studies, speech recognition, Steve Jobs, subscription business, telemarketer, The Market for Lemons, transaction costs, winner-take-all economy

And because digital files are trivial to reproduce, possession in itself tells us very little about legal entitlement. Surprisingly, cryptocurrencies like bitcoin may help solve the problem of tracking rights in digital assets.50 Bitcoin is a payment system and corresponding digital currency created in 2008. It is not governed by any central authority; there is no government, central bank, or financial institution standing behind the over $3 billion of bitcoin in the market. Instead, bitcoin relies on its core underlying innovation—the block chain—to verify transactions. Fundamentally, the block chain is a record of transactions. It functions much like the title records at your local county clerk’s office or your own checkbook ledger—except the block chain keeps track of every single bitcoin transaction across the globe, updated every ten minutes, to provide a complete and reliable record of ownership.

Rub, “The Unconvincing Case for Resale Royalties,” Yale Law Journal Forum 124 (2014): 1, http://www.yalelawjournal.org/forum/the-unconvincing-case-for-resale-royalties, accessed September 4, 2015. 50. For a thorough discussion of the insights bitcoin offers for property in general and digital assets in particular, see Joshua A. T. Fairfield, “Bitproperty,” Southern California Law Review 88 (May 2015): 805–874. 51. James Grimmelmann and Arvind Narayanan, “The Blockchain Gang,” Slate, February 16, 2016, http://www.slate.com/articles/technology/future_tense/2016/02/bitcoin_s_blockchain_technology_won_t_change_everything.html, accessed April 10, 2015. 52. Marc Andreessen, “Why Bitcoin Matters,” Dealbook (blog), New York Times, January 21, 2014, http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/, accessed September 4, 2015. 53. Although the public ledger does not include sender and recipient names, it does include account numbers.

It’s the result of an ingeniously complex, cooperative effort. That means the block chain costs very little to maintain, but is highly resistant to manipulation. Trust is essential; if users can’t rely on the information it provides, a ledger like the block chain has no value. While bitcoin remains a large-scale experiment in digital currency, the underlying technology is application-neutral. As Marc Andreessen, whose venture capital firm has invested $50 million in bitcoin-related companies, wrote in the New York Times: “Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer.


pages: 665 words: 146,542

Money: 5,000 Years of Debt and Power by Michel Aglietta

bank run, banking crisis, Basel III, Berlin Wall, bitcoin, blockchain, Bretton Woods, British Empire, business cycle, capital asset pricing model, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, David Graeber, debt deflation, dematerialisation, Deng Xiaoping, double entry bookkeeping, energy transition, eurozone crisis, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, forward guidance, Francis Fukuyama: the end of history, full employment, German hyperinflation, income inequality, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, joint-stock company, Kenneth Arrow, Kickstarter, liquidity trap, margin call, means of production, money market fund, moral hazard, Nash equilibrium, Network effects, Northern Rock, oil shock, planetary scale, plutocrats, Plutocrats, price stability, purchasing power parity, quantitative easing, race to the bottom, reserve currency, secular stagnation, seigniorage, shareholder value, special drawing rights, special economic zone, stochastic process, the payments system, the scientific method, too big to fail, trade route, transaction costs, transcontinental railway, Washington Consensus

LOCAL CURRENCIES AND BITCOIN: OPPOSED MONETARY LOGICS A parallel is often made between local and complementary currencies and bitcoin. These two categories of monetary innovation, characteristic of the early twenty-first century, both question the relationship between money and sovereignty and express the will of their users to regain control of money. In the case of bitcoin, this takes place virtually and in a network, whereas for local and complementary currencies it takes place at the local territorial level. On the model of numerous other crypto-monies, bitcoin has clashed with the traditional conception of money, as something unitary, sovereign, territorial and centralised. But it is mistaken to compare it with local and complementary currencies. Far from it: bitcoin is instead a ‘local complementary anti-currency’.13 Bitcoin is nothing but a disembodied monetary instrument.

So, it cannot guarantee the liquidity necessary to the requirements of the economic circuit through which goods and services are produced, by way of advances that finance the real economy. When economic activities drop off, bitcoin cannot provide public stimulus measures. By definition, the distribution of bitcoin is highly unequal: it favours those who had it first (early adopters), to the detriment of the latest users. The hyper-volatility in its price means that it is a monetary instrument little-conducive to fixing expectations and making payments permanent. Contrary to the idea that it could provide a solution to the problems posed by the international monetary regime, bitcoin cannot fulfil the functions of a global public good. Fixed in advance, the supply of bitcoin cannot respond to the global need for liquidity. Its highly speculative character does not work in favour of stabilising the international monetary system. Holding such currency is all the riskier given that there is no guarantee that it can be converted into ‘official’ money by the public authorities.

Holding such currency is all the riskier given that there is no guarantee that it can be converted into ‘official’ money by the public authorities. While the protocol for validating transactions is itself highly secured, the same is not necessarily true of bitcoin storage. The anonymity of bitcoin transactions (or at least, the difficulty in tracing operations) is a godsend for cyber-criminality and money laundering. If we take a look at the crypto-anarchist and libertarian ideas that inspire bitcoin, we see that it seduces users through the illusion that they are taking ownership over money and ridding themselves of what they consider to be the harmful interventions of the actors charged with controlling it (states, central banks and other banks). Bitcoin thus reveals its true nature as a money that is anonymous, anti-sovereignty, anti-bank, anti-state and – therefore – anti-commons. This is quite unlike local currencies.


pages: 50 words: 15,603

Orwell Versus the Terrorists: A Digital Short by Jamie Bartlett

augmented reality, barriers to entry, bitcoin, blockchain, crowdsourcing, cryptocurrency, Edward Snowden, Ethereum, ethereum blockchain, Kuwabatake Sanjuro: assassination market, Satoshi Nakamoto, technoutopianism, Zimmermann PGP

A decentralised world that is both private and impossible to censor. Back in 2009, in an obscure cryptography chat forum, a mysterious man called Satoshi Nakamoto invented the crypto-currency Bitcoin.fn3 It turns out the real genius of Bitcoin was not the currency at all, but the way that it works. Bitcoin creates an immutable, unchangeable public copy of every transaction ever made by its users, which is hosted and verified by every computer that downloads the software. This public copy is called the ‘blockchain’. Pretty soon, enthusiasts figured out that the blockchain system could be used for anything. Armed with 30,000 Bitcoins (around $12 million) of crowdfunded support, the Ethereum project is dedicated to creating a new, blockchain-operated internet. Ethereum’s developers hope the system will herald a revolution in the way we use the net – allowing us to do everything online directly with each other, not through the big companies that currently mediate our online interaction and whom we have little choice but to trust with our data.

The first thing that strikes you on signing up on these market sites is how eerily familiar they all feel – they’re just like eBay or Amazon. Every one of the thousands of products on offer has a detailed description, a photograph and a price. All products and vendors are rated out of five by buyers, who also provide detailed written feedback. There are customer service buttons and shopping carts and free-package-and-delivery and one-off specials. I, like thousands of others, placed an order; paid with bitcoin; and waited for my product to arrive in the post. Which it did, bang on time. The hardest thing is deciding what to buy, since there is an unbelievable choice of products on offer. The Silk Road 2.0 (which was closed by the FBI and other police forces in late 2014) was an anonymous market for anything, with few exceptions, which meant wares stretched from the mundane to the bizarre: listings I spotted on one visit included a complete box-set of The Sopranos and a hundred-dollar Marine Depot Aquarium Supplies voucher.

I became the moderator of an infamous trolling group and spent weeks in forums dedicated to cutting, starving or killing yourself. I explored the labyrinthine world of Tor Hidden Services in search of drugs, and to study child pornography networks. I witnessed online wars between neo-Nazis and anti-fascists on popular social media sites, and signed up to the latest porn channels to examine current trends in home-made erotica. I visited a Barcelona squat with anarchist Bitcoin programmers, run-down working men’s clubs to speak to extreme nationalists, and a messy bedroom to observe three girls make a small fortune performing sexually explicit acts on camera to thousands of viewers. By exploring and comparing these worlds, I also hoped to answer a difficult question: do the features of anonymity and connectivity free the darker sides of our nature? And if so, how? The Dark Net is not an effort to weigh up the pros and cons of the internet.


pages: 275 words: 77,017

The End of Money: Counterfeiters, Preachers, Techies, Dreamers--And the Coming Cashless Society by David Wolman

addicted to oil, Bay Area Rapid Transit, Berlin Wall, Bernie Madoff, bitcoin, Bretton Woods, carbon footprint, cashless society, central bank independence, collateralized debt obligation, corporate social responsibility, credit crunch, cross-subsidies, Diane Coyle, fiat currency, financial innovation, floating exchange rates, German hyperinflation, greed is good, Isaac Newton, Kickstarter, M-Pesa, Mahatma Gandhi, mental accounting, mobile money, money: store of value / unit of account / medium of exchange, offshore financial centre, P = NP, Peter Thiel, place-making, placebo effect, Ponzi scheme, Ronald Reagan, seigniorage, Silicon Valley, special drawing rights, Steven Levy, the payments system, transaction costs, WikiLeaks

It may be tempting to belittle alternative currencies as limited, unrealistic, or maybe a little hippie-ish, but they do work, so long as they don’t run into a counterfeiting problem, and so long as the supply of this money is intelligently controlled so as to avoid inflation (or worse). That’s why Bitcoin’s algorithmic approach to steering the money supply is captivating, although wild fluctuations in its value in the summer of 2011 suggest to some that The Economist is correct: “Bitcoin is technically sophisticated. As a monetary system, it looks primitive.”7 Alternative currencies are at a disadvantage due to their limited connection to the banking system. Credit is money too, after all, but there aren’t really loans out there denominated in Ven or Bitcoin, let alone Kilowatt Cards. Nevertheless, nothing but perception makes the issuing authority of the U.S. government more legitimate than the Ithaca HOURs Circulation Committee.

Projects like Hub Culture, Bitcoin, and Superfluid are trying to blend the interconnectivity of social networks with alternative currency models (although who knows if they’ll still be around by the time you read this). At Superfluid, users trade in Quids, which, as the website explains, are not dollars. “They’re placeholders for favors.” Hub Culture’s currency, Ven, is an attempt to bridge the divide between virtual currencies and real-world goods and services. People in the network transact in the “local” currency, which is priced from a basket of major sovereign currencies, commodities, and carbon futures. Your Ven can be exchanged for one of the major national currencies based on the same floating exchange rates that govern the value of world currencies against one another. Bitcoin has captured peoples’ imaginations because the money supply is determined by an algorithm, not bureaucrats or economists, and there is a cap to the number of Bitcoins that can be created: 21 million.

Bitcoin has captured peoples’ imaginations because the money supply is determined by an algorithm, not bureaucrats or economists, and there is a cap to the number of Bitcoins that can be created: 21 million. Two related experiments are the Wuffie Bank and Serios. Wuffie has tried to set up a currency based on reputation, as determined by an algorithm that measures the influence we have on others via our social networks. Serios is a currency of attention, based on the idea that in the age of information overload, an incoming e-mail loaded with 100 Serios is of more value than one loaded with just five Serios. Or think about the “Like” button on Facebook: when someone clicks this button on an article, product, or online video, she is assigning a tiny additional value that wasn’t there before.5 In the summer of 2011, the publishers of Longshot magazine decided that instead of making readers use a conventional paywall, they would ask for payment in U.S. dollars or by sharing the site with others via social media.


pages: 371 words: 108,317

The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future by Kevin Kelly

A Declaration of the Independence of Cyberspace, AI winter, Airbnb, Albert Einstein, Amazon Web Services, augmented reality, bank run, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, book scanning, Brewster Kahle, Burning Man, cloud computing, commoditize, computer age, connected car, crowdsourcing, dark matter, dematerialisation, Downton Abbey, Edward Snowden, Elon Musk, Filter Bubble, Freestyle chess, game design, Google Glasses, hive mind, Howard Rheingold, index card, indoor plumbing, industrial robot, Internet Archive, Internet of things, invention of movable type, invisible hand, Jaron Lanier, Jeff Bezos, job automation, John Markoff, Kevin Kelly, Kickstarter, lifelogging, linked data, Lyft, M-Pesa, Marc Andreessen, Marshall McLuhan, means of production, megacity, Minecraft, Mitch Kapor, multi-sided market, natural language processing, Netflix Prize, Network effects, new economy, Nicholas Carr, old-boy network, peer-to-peer, peer-to-peer lending, personalized medicine, placebo effect, planetary scale, postindustrial economy, recommendation engine, RFID, ride hailing / ride sharing, Rodney Brooks, self-driving car, sharing economy, Silicon Valley, slashdot, Snapchat, social graph, social web, software is eating the world, speech recognition, Stephen Hawking, Steven Levy, Ted Nelson, the scientific method, transport as a service, two-sided market, Uber for X, uber lyft, Watson beat the top human players on Jeopardy!, Whole Earth Review, zero-sum game

sizable bag rental business: Emily Hamlin Smith, “Where to Rent Designer Handbags, Clothes, Accessories and More,” Cleveland Plain Dealer, September 12, 2012. phone app, such as M-Pesa: Murithi Mutiga, “Kenya’s Banking Revolution Lights a Fire,” New York Times, January 20, 2014. has $3 billion in circulation: “Bitcoin Network,” Bitcoin Charts, accessed June 24, 2015. 100,000 vendors accepting the coins: Wouter Vonk, “Bitcoin and BitPay in 2014,” BitPay blog, February 4, 2015. Six times an hour: Colin Dean, “How Many Bitcoin Are Mined Per Day?,” Bitcoin Stack Exchange, March 28, 2013. Knowledge-Based Trust: Hal Hodson, “Google Wants to Rank Websites Based on Facts Not Links,” New Scientist, February 28, 2015. tools are extensions of our selves: Marshall McLuhan, Understanding Media: The Extensions of Man (New York: McGraw-Hill, 1964).

And some admirable characters championing human rights were looking for a money system that would work outside of corrupt or repressive governments, or in places of no governance at all. What they together came up with is Bitcoin. Bitcoin is a fully decentralized, distributed currency that does not need a central bank for its accuracy, enforcement, or regulation. Since it was launched in 2009, the currency has $3 billion in circulation and 100,000 vendors accepting the coins as payment. Bitcoin may be most famous for its anonymity and the black markets it fueled. But forget the anonymity; it’s a distraction. The most important innovation in Bitcoin is its “blockchain,” the mathematical technology that powers it. The blockchain is a radical invention that can decentralize many other systems beyond money. When I send you one U.S. dollar via a credit card or PayPal account, a central bank has to verify that transaction; at the very least it must confirm I had a dollar to send you.

When I send you one U.S. dollar via a credit card or PayPal account, a central bank has to verify that transaction; at the very least it must confirm I had a dollar to send you. When I send you one bitcoin, no central intermediary is involved. Our transaction is posted in a public ledger—called a blockchain—that is distributed to all other bitcoin owners in the world. This shared database contains a long “chain” of the transaction history of all existing bitcoins and who owns them. Every transaction is open to inspection by anyone. That completeness is pretty crazy; it’s like every person with a dollar having the complete history of all dollar bills as they move around the world. Six times an hour this open distributed database of coins is updated with all the new transactions of bitcoins; a new transaction like ours must be mathematically confirmed by multiple other owners before it is accepted as legitimate.


pages: 294 words: 89,406

Lying for Money: How Fraud Makes the World Go Round by Daniel Davies

bank run, banking crisis, Bernie Madoff, bitcoin, Black Swan, Bretton Woods, business cycle, business process, collapse of Lehman Brothers, compound rate of return, cryptocurrency, financial deregulation, fixed income, Frederick Winslow Taylor, Gordon Gekko, high net worth, illegal immigration, index arbitrage, Nick Leeson, offshore financial centre, Peter Thiel, Ponzi scheme, price mechanism, principal–agent problem, railway mania, Ronald Coase, Ronald Reagan, short selling, social web, South Sea Bubble, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, time value of money, web of trust

Even leaving aside the passing references to his victims ruining their lives and committing suicide, The Brotherhood is full of somewhat ridiculous attempts to claim that the beatings, stabbings and torture carried out by other members of ‘The Firm’ were nothing to do with him. * Bitcoin and similar crypto-currencies have been designed specifically to emulate the anonymity of cash. They don’t fully succeed in doing so – you have to take lots of precautions to make sure that a bitcoin address or ‘wallet’ cannot be linked to you as an individual, and if you make mistakes then the bitcoin architecture will expose your full record of transactions. This is how the proprietor of Silk Road was tracked down and arrested. But tracing a bitcoin address to a human being is generally a task that requires the resources of a law enforcement agency making a special effort to do so. It’s not feasible for an ordinary customer.

But they could still be made the victim of fraudulent or frivolous customer disputes; it was not uncommon for unscrupulous dealers to send in dozens of orders to a rival and then dispute them all, to drive one of their enemies out of business. The biggest problem for the vendors, though, was that the dollar value of bitcoin was incredibly volatile, and they were faced with a typical small business dilemma – revenues in one currency (bitcoin) and costs in another (mainly US dollars). Since the market was competitive and transparent, mark-ups were somewhat less than those available to street dealers, and could easily be wiped out by weekly fluctuations in the bitcoin/dollar ‘exchange rate’. Various means of allowing the vendors to hedge these currency movements were attempted, but they were all quite expensive and none of them worked very well. The escrow system was therefore a pain in the neck for the drug dealers, and so they used their market power to get round it.

However, the suggested remedy of paying the price premium and only dealing via escrow turned out to have its own problems. The customers of 9THWONDER might have avoided this exit scam by using the Evolution escrow service, but this would not have protected them against the fact that Evolution turned out to be run by scammers itself. One day, it disappeared, taking roughly $12m of bitcoin which had been deposited in its escrow accounts. This was a somewhat extreme example of darknet fraud, and in principle there is a technological solution to it – an extension to the bitcoin protocol to allow ‘multi-signature escrow’, so that bitcoins can’t be spent by someone who is only holding them on behalf of another. Darknet researchers, however,* seem to more or less despair of this technology ever catching on – it’s too inconvenient for users, most of whom can’t even be convinced to pass up the price discounts you get for dealing via FE.


pages: 292 words: 85,151

Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (And What to Do About It) by Salim Ismail, Yuri van Geest

23andMe, 3D printing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, Ben Horowitz, bioinformatics, bitcoin, Black Swan, blockchain, Burning Man, business intelligence, business process, call centre, chief data officer, Chris Wanstrath, Clayton Christensen, clean water, cloud computing, cognitive bias, collaborative consumption, collaborative economy, commoditize, corporate social responsibility, cross-subsidies, crowdsourcing, cryptocurrency, dark matter, Dean Kamen, dematerialisation, discounted cash flows, disruptive innovation, distributed ledger, Edward Snowden, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, game design, Google Glasses, Google Hangouts, Google X / Alphabet X, gravity well, hiring and firing, Hyperloop, industrial robot, Innovator's Dilemma, intangible asset, Internet of things, Iridium satellite, Isaac Newton, Jeff Bezos, Joi Ito, Kevin Kelly, Kickstarter, knowledge worker, Kodak vs Instagram, Law of Accelerating Returns, Lean Startup, life extension, lifelogging, loose coupling, loss aversion, low earth orbit, Lyft, Marc Andreessen, Mark Zuckerberg, market design, means of production, minimum viable product, natural language processing, Netflix Prize, NetJets, Network effects, new economy, Oculus Rift, offshore financial centre, PageRank, pattern recognition, Paul Graham, paypal mafia, peer-to-peer, peer-to-peer model, Peter H. Diamandis: Planetary Resources, Peter Thiel, prediction markets, profit motive, publish or perish, Ray Kurzweil, recommendation engine, RFID, ride hailing / ride sharing, risk tolerance, Ronald Coase, Second Machine Age, self-driving car, sharing economy, Silicon Valley, skunkworks, Skype, smart contracts, Snapchat, social software, software is eating the world, speech recognition, stealth mode startup, Stephen Hawking, Steve Jobs, subscription business, supply-chain management, TaskRabbit, telepresence, telepresence robot, Tony Hsieh, transaction costs, Travis Kalanick, Tyler Cowen: Great Stagnation, uber lyft, urban planning, WikiLeaks, winner-take-all economy, X Prize, Y Combinator, zero-sum game

Quicken and Quickbooks have both had a major impact on traditional accounting firms. Now, similar to Mint for personal finance, Wave Accounting offers 100-percent-free small business accounting, although its real business model is to mine the data buried within those transactions. A little further out, the Bitcoin phenomenon continues to unfold. The smartest five VCs we know are all building or investing in between fifteen and twenty Bitcoin companies each. These investments could prove to be unimaginably disruptive. In fact, Salim believes Bitcoin to be the single biggest technology-enabler of the above list. Leading Bitcoin investor Brock Pierce frames it thusly: While the Internet is a medium for open communication—on top of which a layer of secure transactions has been attempted with great difficulty—the block chain itself is an ultra-low-cost infrastructure of secure, guaranteed transactions over which all manner of applications can be laid (currency being just one of them).

CFO – Chief Financial Officer The finance function, although historically very conservative and cautious, is about to face radical disruption from several technologies, including AI (Deep Learning), sensors and Bitcoin (the underlying block chain protocol in particular). Key Opportunity Implications and Actions AI accounting Automatic A/P, A/R software-enabling automatic reminders and payment, automatic tax management, and AIs watching for errant behaviors in transaction flows. Taxation without borders Governments are getting their act together regarding tax havens, which will likely continue to face ever-closer scrutiny in the coming years. Digital payment solutions More than 60,000 merchants already accept Bitcoin, which we predict will hit Wall Street in late 2014 and will most likely be mainstream by 2016. This is in addition to the growing impact of Square and PayPal.

We see a consistent set of steps around disruptive innovation comprising the following: Domain (or technology) becomes information-enabled Costs drop exponentially and access is democratized Hobbyists come together to form an open source community New combinations of technologies and convergences are introduced New products and services appear that are orders of magnitude better and cheaper The status quo is disrupted (and the domain gets information-enabled) We are seeing this evolution occur in drones, DNA sequencing, 3D printing, sensors, robotics and, certainly, Bitcoin. In each domain, an open source, networked community has sprung up, delivering an accelerated stream of innovation exactly in line with the steps listed above. The reason “Disruption is the New Norm” is that democratized, accelerating technologies, combined with the power of community, can now extend Christensen’s Innovator’s Dilemma to an unstoppable force. 4. Beware the “Expert” The old saw that an expert is “somebody who tells you why something cannot be done” is truer than ever before.


pages: 247 words: 81,135

The Great Fragmentation: And Why the Future of All Business Is Small by Steve Sammartino

3D printing, additive manufacturing, Airbnb, augmented reality, barriers to entry, Bill Gates: Altair 8800, bitcoin, BRICs, Buckminster Fuller, citizen journalism, collaborative consumption, cryptocurrency, David Heinemeier Hansson, disruptive innovation, Elon Musk, fiat currency, Frederick Winslow Taylor, game design, Google X / Alphabet X, haute couture, helicopter parent, illegal immigration, index fund, Jeff Bezos, jimmy wales, Kickstarter, knowledge economy, Law of Accelerating Returns, lifelogging, market design, Metcalfe's law, Minecraft, minimum viable product, Network effects, new economy, peer-to-peer, post scarcity, prediction markets, pre–internet, profit motive, race to the bottom, random walk, Ray Kurzweil, recommendation engine, remote working, RFID, Rubik’s Cube, self-driving car, sharing economy, side project, Silicon Valley, Silicon Valley startup, skunkworks, Skype, social graph, social web, software is eating the world, Steve Jobs, survivorship bias, too big to fail, US Airways Flight 1549, web application, zero-sum game

The ratio is still on the money, even today, which is something we can’t claim for state-backed or fiat currency because none of the fiat currencies in the world are backed by the gold standard any more. A new globally networked commercial economy needs a currency to match. Step forward crypto currencies such as bitcoin, which are the next evolution in how we trade. Bitcoin Bitcoin was the first fully implemented and distributed crypto currency. It works in much the same way as other emerging crypto currencies. Crypto currencies are simply decentralised electronic cash systems. The ‘money’ is created by using peer-to-peer networking, digital signatures and cryptography to generate a currency. Bitcoins are mined out of a digital network by computers plugged into a system trying to figure out a 64-digit code that unlocks 50 bitcoins at a time. The money, or bitcoins, is generally traded within the system by using specific peer-to-peer software. It’s a lot like BitTorrent client software.

It’s a lot like BitTorrent client software. All transactions are stored on a publicly distributed database so that the record of transaction is with everyone plugged into the system, rather than in a central storage location. It creates a form of decentralised stability and control in transactions, although the currency itself is highly volatile. A key difference with bitcoin is that the owner of each bitcoin stash is anonymous. The major advantages of bitcoin There’s a cap on the amount that will ever be in circulation (21 million) so it can’t be devalued by inserting more into the economy. There’s no centralised control agency that can destabilise the currency through its economic systems. It’s pan global and not controlled by a government (like gold). It’s digitally native and suits the future of commerce. It can transfer across borders without financial interruptions and fee gouging by existing finance systems.

Yes, banks don’t own currency, but the reason crypto currencies such as bitcoin are emerging is because of the banks themselves. Their opportunistic fee-taking is a counter move to the lower cost transaction (of all things) world we’re moving towards. Taking advantage of the system they feed off enables new systems to emerge. Banks haven’t provided simplified systems for modern-day digital trade and the net result is that this will eat into one of their revenue streams, another hardly noticeable leak in the industry bucket. It’s a form of system hacking, if you like. Unstable yet permanent Yes, bitcoin and crypto currencies are unstable and risky, but they’re in many ways no less stable than other stores of money. While bitcoin fluctuates wildly, its overriding direction is for more users, more traders who accept it and importantly its increasing value on the long-term trajectory.


pages: 309 words: 79,414

Going Dark: The Secret Social Lives of Extremists by Julia Ebner

23andMe, 4chan, Airbnb, anti-communist, anti-globalists, augmented reality, Ayatollah Khomeini, bitcoin, blockchain, Boris Johnson, citizen journalism, cognitive dissonance, crowdsourcing, cryptocurrency, Donald Trump, Elon Musk, feminist movement, game design, glass ceiling, Google Earth, job satisfaction, Mark Zuckerberg, mass immigration, Menlo Park, Mikhail Gorbachev, Network effects, off grid, pattern recognition, pre–internet, QAnon, RAND corporation, ransomware, rising living standards, self-driving car, Silicon Valley, Skype, Snapchat, social intelligence, Steve Jobs, Transnistria, WikiLeaks, zero day

Using the decentralised, unregulated currency to evade traditional financial services is more than a pragmatic solution to extremists. ‘It’s also a political statement,’ says American cyber-security expert John Bambenek, who built a tool that tracks neo-Nazi bitcoin transactions. ‘If you believe the banks are part of the Jewish world conspiracy nonsense, well, then there are only two ways to make financial transactions: it’s either cash or it’s bitcoin.’ Against this background, it is unsurprising that American white nationalist Richard Spencer labelled bitcoin the ‘currency of the alt-right’ long before the bitcoin craze started. After prominent alt-right figures were banned from mainstream crowdsourcing platforms such as Patreon and GoFundMe, and blocked by online payment providers such as PayPal, Apple Pay and Google Pay, some switched to Hatreon.

He may have accumulated additional sums in his non-public wallets.10 Likewise, jihadists have attracted large sums through cryptocurrency donations. A pro-ISIS group was even able to generate enough money to reward its ‘cyber-jihadists’. ‘We have exchanged parts of our bitcoins to equip the brothers who helped in our last missions with computers,’ one of the group’s members wrote in their private chat group in December 2017. On Telegram and the Dark Net, terrorists have increasingly called on their sympathisers to donate in cryptocurrencies.11 For example, the Al-Qaeda-linked organisation al-Sadaqa campaigned for bitcoin donations in November 2017, while Indonesian ISIS leader Bahrun Naim used the cryptocurrency to transfer money to his followers.12 Bitcoin transactions, however, can be tracked, and wallets are easily traced back to their owners due to the highly transparent blockchain technology this cryptocurrency is built on.

The left-leaning twentieth-century ideologue was long hated by the political right but alt-right campaigners have started to employ his tactics, perhaps more effectively than the contemporary political left.21 Weev tells me that he doesn’t make speculative predictions on events he can’t control, but speculating on the election victory and continuing success of Donald J. Trump was a good decision: ‘It has earned me a literal fortune in bitcoin.’ He explains that he does most of his business in bitcoin and some in Monero, which, according to him, is better from a technical standpoint. In contrast to bitcoin, it is non-transparent and transactions cannot be traced back. ‘Less people are using it right now but I expect that this will change in the future,’ he writes. Weev continues to explain that he does not get his inspiration from previous counter-cultural movements and that he is not trying to build a counter-culture.


pages: 237 words: 67,154

Ours to Hack and to Own: The Rise of Platform Cooperativism, a New Vision for the Future of Work and a Fairer Internet by Trebor Scholz, Nathan Schneider

1960s counterculture, activist fund / activist shareholder / activist investor, Airbnb, Amazon Mechanical Turk, barriers to entry, basic income, bitcoin, blockchain, Build a better mousetrap, Burning Man, capital controls, citizen journalism, collaborative economy, collaborative editing, collective bargaining, commoditize, conceptual framework, crowdsourcing, cryptocurrency, Debian, deskilling, disintermediation, distributed ledger, Ethereum, ethereum blockchain, future of work, gig economy, Google bus, hiring and firing, income inequality, information asymmetry, Internet of things, Jacob Appelbaum, Jeff Bezos, job automation, Julian Assange, Kickstarter, lake wobegon effect, low skilled workers, Lyft, Mark Zuckerberg, means of production, minimum viable product, moral hazard, Network effects, new economy, offshore financial centre, openstreetmap, peer-to-peer, post-work, profit maximization, race to the bottom, ride hailing / ride sharing, SETI@home, shareholder value, sharing economy, Shoshana Zuboff, Silicon Valley, smart cities, smart contracts, Snapchat, TaskRabbit, technoutopianism, transaction costs, Travis Kalanick, Uber for X, uber lyft, union organizing, universal basic income, Whole Earth Catalog, WikiLeaks, women in the workforce, Zipcar

THE POTENTIAL OF THE BLOCKCHAIN One instrument for converting open platforms into digital commons is the blockchain ledger, the software innovation that lies at the heart of the Bitcoin digital currency network. Although Bitcoin itself has been designed to serve familiar capitalist functions (tax avoidance, private accumulation through speculation), the blockchain ledger is significant because it can enable highly reliable, versatile forms of collective action on open networks. It does this by validating the authenticity of a digital object (for example, a bitcoin) without the need for a third-party guarantor such as a bank or government body. This solves a particularly difficult collective-action problem in an open network context: How do you know that a given digital object—a bitcoin, a legal document, digital certificate, dataset, a vote, or a digital identity asserted by an individual—is the real thing and not a forgery?

BLOCKCHAINS AND THEIR PITFALLS RACHEL O’DWYER A blockchain is essentially a distributed database. The technology first appeared in 2009 as the basis of the Bitcoin digital currency system, but it has potential for doing much, much more—including aiding in the development of platform cooperatives. Traditionally, institutions use centralized databases. For example, when you transfer money using a bank account your bank updates its ledger to credit and debit accounts accordingly. In this example, there is one central database and the bank is a trusted intermediary who manages it. With a blockchain, this record is shared among all participants in the network. To send bitcoin, for example, an owner publicly broadcasts a transaction to all participants in the network. Participants collectively verify that the transaction indeed took place and update the database accordingly.

Even if technology does not determine outcomes, technologies have “affordances” that favor some outcomes over others. According to this view, the networked structure of the Internet has certain affordances for democratic politics and decentralized organization; the use of free and open source software is a political commitment to openness as well as a technological one. The enthusiasm for the blockchain—the distributed, decentralized ledger that provides the basis for Bitcoin and other digital currencies—is a recent expression of the same idea, even if the particular values are different. Consider, for instance, rating systems. Many see rating systems as another technology that embeds a democratic and egalitarian politics. Rating systems have become an alternative to experts. No longer do we have to rely on an elite class of old-guard establishment critics to guide our tastes: we can do it ourselves.


pages: 422 words: 104,457

Dragnet Nation: A Quest for Privacy, Security, and Freedom in a World of Relentless Surveillance by Julia Angwin

AltaVista, Ayatollah Khomeini, barriers to entry, bitcoin, Chelsea Manning, Chuck Templeton: OpenTable:, clean water, crowdsourcing, cuban missile crisis, data is the new oil, David Graeber, Debian, Edward Snowden, Filter Bubble, Firefox, GnuPG, Google Chrome, Google Glasses, informal economy, Jacob Appelbaum, John Markoff, Julian Assange, Marc Andreessen, market bubble, market design, medical residency, meta analysis, meta-analysis, mutually assured destruction, Panopticon Jeremy Bentham, prediction markets, price discrimination, randomized controlled trial, RFID, Robert Shiller, Ronald Reagan, security theater, Silicon Valley, Silicon Valley startup, Skype, smart meter, Steven Levy, Upton Sinclair, WikiLeaks, Y2K, zero-sum game, Zimmermann PGP

For instance, if I created: “How Spamgourmet Works,” https://spamgourmet.com/. So I started using: MaskMe, Abine, Inc., https://www.abine.com/maskme/. I hoped to buy bitcoins: “FAQ—Bitcoin,” accessed August 21, 2013, https://en.bitcoin.it/wiki/FAQ#How_can_I_get_bitcoins.3F. Bitcoins can be used on: Adrian Chen, “The Underground Website Where You Can Buy Any Drug Imaginable,” Kotaku.com, June 1, 2011, http://kotaku.com/5805928/the-underground-website-where-you-can-buy-any-drug-imaginable. In May 2013, Kashmir Hill: Kashmir Hill, “Living on Bitcoin for a Week: The Journey Begins,” Forbes.com, May 1, 2013, http://www.forbes.com/sites/kashmirhill/2013/05/01/living-on-bitcoin-for-a-week-the-journey-begins/. A digital cash start-up, E-gold: United States Department of Justice, “Digital Currency E-Gold Indicted for Money Laundering and Illegal Money Transmitting,” press release, April 27, 2007, http://www.justice.gov/opa/pr/2007/April/07_crm_301.html.

I decided to try to find a more anonymous currency. I hoped to buy bitcoins, a virtual digital currency that was all the rage in the hacker community. But I couldn’t find a place that would let me buy bitcoins with a credit card. They all wanted my bank account number or a wire transfer—apparently because people often call their credit card company complaining that they didn’t receive their virtual coins. Bitcoins can be used on online “black markets” that can sell drugs and weapons. However, some brick-and-mortar businesses have started accepting bitcoins. In May 2013, Kashmir Hill, a reporter for Forbes, lived for a week only on bitcoins—subsisting mostly via a food delivery service in San Francisco that accepted the currency. However, all Bitcoin transactions are logged and publicly viewable. People’s names are not attached to their transactions, but a determined investigator could likely identify people behind certain Bitcoin transactions.

People’s names are not attached to their transactions, but a determined investigator could likely identify people behind certain Bitcoin transactions. This was not the anonymity I was seeking. * * * The deeper I looked at anonymous digital transactions, the less I liked them. They seemed to be havens for criminals. In 2007, a digital cash start-up, E-gold, was charged with money laundering. The indictment said the company knew that its services were used by identity thieves, child pornographers, and other criminals. The following year the company and its owners pleaded guilty to money laundering. And in 2013, federal prosecutors shut down the anonymous online currency exchange Liberty Reserve, charging that it was a $6 billion money-laundering operation for child pornographers and other criminals.


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Sandworm: A New Era of Cyberwar and the Hunt for the Kremlin's Most Dangerous Hackers by Andy Greenberg

air freight, Airbnb, Bernie Sanders, bitcoin, blockchain, call centre, clean water, data acquisition, Donald Trump, Edward Snowden, global supply chain, hive mind, Julian Assange, Just-in-time delivery, Kickstarter, Mikhail Gorbachev, open borders, pirate software, pre–internet, profit motive, ransomware, RFID, speech recognition, Steven Levy, Stuxnet, undersea cable, uranium enrichment, Valery Gerasimov, WikiLeaks, zero day

Below that message, the post included links to download sites where they had uploaded free “proof” files as samples, along with another encrypted file that supposedly contained a collection of secret hacking tools that they bragged were “better than Stuxnet.” The Shadow Brokers demanded that anyone who wanted to see the contents of that file send bitcoin bids to a certain address. None of those bids, they stipulated, would be refunded. And only the highest bidder would be given the key to decrypt this purported holy grail of hacking. In another bizarre note, the Shadow Brokers said that if bidding reached one million bitcoins—at the time well over half a billion dollars—they’d release all the secret files to the public. Finally, the message ended with a strange paragraph about “wealthy elites” whom the Shadow Brokers seemed to be simultaneously threatening with their stolen NSA hacking tools and targeting with a hard-sell pitch.

Instead of an abstract fear that U.S. cyberweapons would inspire adversaries to develop their own, America’s hacking arsenal had fallen, suddenly and directly, into enemy hands. * * * ■ In the early days after the Shadow Brokers’ post, it appeared that the group’s operation might be a bust. They did not get their one-million-bitcoin jackpot. Instead, in the first twenty-four hours of their auction, they received a grand total of $937.15, according to the Bitcoin blockchain’s public record of transactions. But the auction nonetheless served to create buzz around the NSA’s security breach. Experts largely agreed the profit motive was likely a cover story, that the Shadow Brokers were probably state-sponsored hackers, not cybercriminals, and they were seeking above all to embarrass the NSA.

Perhaps the Shadow Brokers’ sketchy auction setup had scared off buyers. Or perhaps their entire moneymaking venture had been elaborate theater. Either way, by January, they suddenly declared that their sales routine had failed and that they were calling it quits. “So long, farewell peoples. TheShadowBrokers is going dark, making exit: Continuing is being much risk and bullshit, not many bitcoins,” they wrote. “Despite theories, it always being about bitcoins for TheShadowBrokers. Free dumps and bullshit political talk was being for marketing attention.” For another three months, the group seemed to have vanished. Some in the security industry speculated that the group’s work had always been designed as a distraction from Russia’s hacking of election-related targets and with the inauguration of Donald Trump as president in early 2017 their work was done.


pages: 361 words: 81,068

The Internet Is Not the Answer by Andrew Keen

"Robert Solow", 3D printing, A Declaration of the Independence of Cyberspace, Airbnb, AltaVista, Andrew Keen, augmented reality, Bay Area Rapid Transit, Berlin Wall, bitcoin, Black Swan, Bob Geldof, Burning Man, Cass Sunstein, citizen journalism, Clayton Christensen, clean water, cloud computing, collective bargaining, Colonization of Mars, computer age, connected car, creative destruction, cuban missile crisis, David Brooks, disintermediation, disruptive innovation, Donald Davies, Downton Abbey, Edward Snowden, Elon Musk, Erik Brynjolfsson, Fall of the Berlin Wall, Filter Bubble, Francis Fukuyama: the end of history, Frank Gehry, Frederick Winslow Taylor, frictionless, full employment, future of work, gig economy, global village, Google bus, Google Glasses, Hacker Ethic, happiness index / gross national happiness, income inequality, index card, informal economy, information trail, Innovator's Dilemma, Internet of things, Isaac Newton, Jaron Lanier, Jeff Bezos, job automation, Joi Ito, Joseph Schumpeter, Julian Assange, Kevin Kelly, Kickstarter, Kodak vs Instagram, Lean Startup, libertarian paternalism, lifelogging, Lyft, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Martin Wolf, Metcalfe’s law, move fast and break things, move fast and break things, Nate Silver, Nelson Mandela, Network effects, new economy, Nicholas Carr, nonsequential writing, Norbert Wiener, Norman Mailer, Occupy movement, packet switching, PageRank, Panopticon Jeremy Bentham, Paul Graham, peer-to-peer, peer-to-peer rental, Peter Thiel, plutocrats, Plutocrats, Potemkin village, precariat, pre–internet, RAND corporation, Ray Kurzweil, ride hailing / ride sharing, Robert Metcalfe, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Skype, smart cities, Snapchat, social web, South of Market, San Francisco, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, TaskRabbit, Ted Nelson, telemarketer, The Future of Employment, the medium is the message, the new new thing, Thomas L Friedman, Travis Kalanick, Tyler Cowen: Great Stagnation, Uber for X, uber lyft, urban planning, Vannevar Bush, Whole Earth Catalog, WikiLeaks, winner-take-all economy, working poor, Y Combinator

Distributed capitalism equals ubiquitous capitalism. That’s the evolutionary logic of networked economics. In the financial market, Bitcoin already has its own trading indexes where hundreds of millions of dollars are speculated on the electronically networked currency. Digital money like Bitcoin represent a peer-to-peer alternative to centrally controlled currencies like the US dollar or Swedish krona, an alternative in which middlemen and thus banks and banking fees are eliminated. Writing in the New York Times to explain “why Bitcoin matters,” Marc Andreessen—who now is the managing partner of Andreessen Horowitz, a $4 billion Silicon Valley venture fund with $50 million invested in Bitcoin-based startups like the virtual wallet Coinbase—argues that this new digital money represents “a classic network effect, a positive feedback loop.”

Writing in the New York Times to explain “why Bitcoin matters,” Marc Andreessen—who now is the managing partner of Andreessen Horowitz, a $4 billion Silicon Valley venture fund with $50 million invested in Bitcoin-based startups like the virtual wallet Coinbase—argues that this new digital money represents “a classic network effect, a positive feedback loop.” As with the Web, Andreessen says, the more people who use the new currency, “the more valuable Bitcoin is for the people who use it.”107 “A mysterious new technology emerges, seemingly out of nowhere, but actually the result of two decades of intense research and development by nearly anonymous researchers,” writes Andreessen, predicting the historical significance of this networked currency. “What technology am I talking about? Personal computers in 1975, the Internet in 1993, and—I believe—Bitcoin in 2014.”108 What Silicon Valley euphemistically calls the “sharing economy” is a preview of this distributed capitalism system powered by the network effect of positive feedback loops. Investors like Andreessen see the Internet—a supposedly hyperefficient, “frictionless” platform for buyers and sellers—as an upgrade to the structural inefficiencies of the top-down twentieth-century economy.

“The Internet,” Joi Ito, the director of the MIT Media Lab, notes, “is not a technology; it’s a belief system.”14 Everything and everyone are being connected in a network revolution that is radically disrupting every aspect of today’s world. Education, transportation, health care, finance, retail, and manufacturing are now being reinvented by Internet-based products such as self-driving cars, wearable computing devices, 3-D printers, personal health monitors, massive open online courses (MOOCs), peer-to-peer services like Airbnb and Uber, and currencies like Bitcoin. Revolutionary entrepreneurs like Sean Parker and Kevin Systrom are building this networked society on our behalf. They haven’t asked our permission, of course. But then the idea of consent is foreign, even immoral, to many of these architects of what the Columbia University historian Mark Lilla calls our “libertarian age.” “The libertarian dogma of our time,” Lilla says, “is turning our polities, economies and cultures upside down.” 15 Yes.


pages: 550 words: 84,515

Vue.js 2 Cookbook by Andrea Passaglia

bitcoin, Kickstarter, loose coupling, MVC pattern, node package manager, Silicon Valley, single page application, web application, WebSocket

isAdult(cat)) } } In our recipe, we could call the euro getter to have some more derived data, like roughly how many houses we can buy with our Bitcoin given an average price of 150,000 euros: const store = new Vuex.Store({ state: { bitcoin: 600, rate: 1000 }, getters: { euro: state => state.bitcoin * state.rate, houses: (state, getters) => getters.euro() / 150000 }) Passing an argument If a getter returns a function with an argument, that argument will be the argument of the getter: getters: { ... getWorldWonder: state => nth => state.worldWonders[nth] } In our recipe, a practical example could specify the average cost of a house in the getter from the previous paragraph: const store = new Vuex.Store({ state: { bitcoin: 600, rate: 1000 }, getters: { euro: state => state.bitcoin * state.rate, houses: (state, getters) => averageHousePrice => { return getters.euro() / averageHousePrice } }) Testing your store As you know from Chapter 7, Unit Testing and End-To-End Testing, testing is the most important part of professional software.

The second kind of error can be that we tell the user the bitcoin and euro balance during a transaction, resulting in a stale and wrong amount for one of the two. To tackle these issues, we use getters: const store = new Vuex.Store({ state: { bitcoin: 600, rate: 1000 }, getters: { euro: state => state.bitcoin * state.rate } }) This way the euro amount is never in the state but always computed. Moreover, it is centralized in the store, so we don't need to add anything to our components. Now, it's easy to retrieve the two amounts from a template: <template> <div> <h1>Balance</h1> <ul> <li>{{$store.state.bitcoin}}฿</li> <li>{{$store.getters.euro}}&euro;</li> </ul> </div> </template> Here, &#3647 ; is the HTML entity for the Bitcoin symbol. How it works... Having a getter for derived data is always a good idea if we are not talking about input data. A notable feature of getters we have not yet discussed is their ability to interact with other getters and take an argument.

Getting ready This recipe is for you if you already have some Vuex knowledge and want to expand your horizons. How to do it... Imagine that you are building a Bitcoin wallet. You want to give your users an overview of their balance, and you want them to see how many Euros it corresponds to. Create a new Webpack template with vue init webpack and npm install vuex. Create a new src/store/index.js file and write the following inside it: import Vue from 'vue' import Vuex from 'vuex' Vue.use(Vuex) const store = new Vuex.Store({ state: { bitcoin: 600, rate: 1000, euro: 600000 } }) export default store This code is prone to errors. The first error can be a miscalculation of the Euro amount if we don't get the multiplication right. The second kind of error can be that we tell the user the bitcoin and euro balance during a transaction, resulting in a stale and wrong amount for one of the two.


pages: 464 words: 139,088

The End of Alchemy: Money, Banking and the Future of the Global Economy by Mervyn King

"Robert Solow", Andrei Shleifer, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, collapse of Lehman Brothers, creative destruction, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Doha Development Round, Edmond Halley, Fall of the Berlin Wall, falling living standards, fiat currency, financial innovation, financial intermediation, floating exchange rates, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, German hyperinflation, Hyman Minsky, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labour market flexibility, large denomination, lateral thinking, liquidity trap, Long Term Capital Management, manufacturing employment, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Nick Leeson, North Sea oil, Northern Rock, oil shale / tar sands, oil shock, open economy, paradox of thrift, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, quantitative easing, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Satoshi Nakamoto, savings glut, secular stagnation, seigniorage, stem cell, Steve Jobs, The Great Moderation, the payments system, The Rise and Fall of American Growth, Thomas Malthus, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, yield curve, Yom Kippur War, zero-sum game

In principle, two parties engaged in a transaction could instead settle directly by a transfer of money from one electronic account to another in ‘real time’. A step in that direction was the creation of bitcoin – a ‘virtual’ currency launched in 2009, allegedly by one or more individuals under the pseudonym of Satoshi Nakamoto. Ownership of bitcoins is transferred through bilateral transactions without the need for verification by a third party (necessary in all other current electronic payment systems). Transactions are verified by the use of a software accounting system accessible to all users.35 The supply of bitcoins is governed by an algorithm embodied in the software that runs the system (with a maximum number of twenty-one million). If you can persuade someone to accept payment in bitcoins, then you can use them to buy ‘stuff’. The price of bitcoins in terms of goods and services, or currencies such as the dollar, is determined in the market.

The price of bitcoins in terms of goods and services, or currencies such as the dollar, is determined in the market. Without any public body setting the standard for bitcoins as a unit of account, their price is highly volatile – less than $1 when launched, a peak of over $1100 in December 2013, and back to below $400 in late 2015.36 With no one standing ready to redeem them in terms of any other commodity or currency, bitcoins are a highly speculative investment. They have no fundamental value: their price simply reflects the value that bitcoins are expected to have in the future. The integrity of the algorithm determining the supply of bitcoins is vital. An indication of what can go wrong when confidence in that process is lost is the fate of a related venture, the auroracoin, a digital currency in Iceland. As an alternative to government-issued paper money, auroracoins were circulated in Iceland by a private entrepreneur in March 2014 through a ‘helicopter’ drop to every citizen listed on the national ID register.

The increase of cybercrime is analysed in the 2014 US State of Cybercrime Survey, www.pwc.com/cybersecurity 35 This system, effectively a public ledger of all current and past transactions, is known as the block chain technology. 36 Similar huge swings in prices can be seen in related digital currencies, for example Scotcoins in Scotland. 37 http://auroracoin.org 38 Although, unlike cash, transactions with bitcoins leave a permanent record in the software accounting system, leading commentators such as Brito and Castillo (2013) to describe them not as anonymous but pseudonymous. Money stored as bitcoins can also be stolen by hackers or lost through carelessness, just as cash is vulnerable to theft or loss. 39 Yermack (2013) provides data on the relative volatilities of the prices of bitcoins, gold and the major currencies. The volatility of bitcoins is an order of magnitude higher than the other currencies. 40 Economies of this kind have been discussed by Fama (1980), Hall (1983) and Issing (1999). 41 On money as a unit of account see Doepke and Schneider (2013). 42 Magna Carta, chapter 35, translation of the original Latin of 1215. 43 Hayek (1976).


pages: 533

Future Politics: Living Together in a World Transformed by Tech by Jamie Susskind

3D printing, additive manufacturing, affirmative action, agricultural Revolution, Airbnb, airport security, Andrew Keen, artificial general intelligence, augmented reality, automated trading system, autonomous vehicles, basic income, Bertrand Russell: In Praise of Idleness, bitcoin, blockchain, brain emulation, British Empire, business process, Capital in the Twenty-First Century by Thomas Piketty, cashless society, Cass Sunstein, cellular automata, cloud computing, computer age, computer vision, continuation of politics by other means, correlation does not imply causation, crowdsourcing, cryptocurrency, digital map, distributed ledger, Donald Trump, easy for humans, difficult for computers, Edward Snowden, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ethereum, ethereum blockchain, Filter Bubble, future of work, Google bus, Google X / Alphabet X, Googley, industrial robot, informal economy, intangible asset, Internet of things, invention of the printing press, invention of writing, Isaac Newton, Jaron Lanier, John Markoff, Joseph Schumpeter, Kevin Kelly, knowledge economy, lifelogging, Metcalfe’s law, mittelstand, more computing power than Apollo, move fast and break things, move fast and break things, natural language processing, Network effects, new economy, night-watchman state, Oculus Rift, Panopticon Jeremy Bentham, pattern recognition, payday loans, price discrimination, price mechanism, RAND corporation, ransomware, Ray Kurzweil, Richard Stallman, ride hailing / ride sharing, road to serfdom, Robert Mercer, Satoshi Nakamoto, Second Machine Age, selection bias, self-driving car, sexual politics, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, smart contracts, Snapchat, speech recognition, Steve Jobs, Steve Wozniak, Steven Levy, technological singularity, the built environment, The Structural Transformation of the Public Sphere, The Wisdom of Crowds, Thomas L Friedman, universal basic income, urban planning, Watson beat the top human players on Jeopardy!, working-age population

Economist, ‘Not-so-clever Contracts’, 28 July 2016 <http://www. economist.com/news/business/21702758-time-being-leasthuman-judgment-still-better-bet-cold-hearted?frsc=dg%7Cd> (accessed 30 November 2017). 29. Tapscott and Tapscott, Blockchain Revolution, 18. 30. Tapscott and Tapscott, Blockchain Revolution, 253–9; Benjamin Loveluck and Primavera De Filippi,‘The Invisible Politics of Bitcoin: Governance Crisis of a Decentralized Infrastructure’, Internet Policy Review 5, no. 3 (30 September 2016) <http://policyreview.info/articles/ analysis/invisible-politics-bitcoin-governance-crisis-decentralisedinfrastructure> (accessed 30 November 2017); Erik Brynjolfsson and OUP CORRECTED PROOF – FINAL, 30/05/18, SPi РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Notes 31. 32. 33. 34. 35. 36. 37. 379 Andrew McAfee, Machine Platform Crowd: Harnessing Our Digital Future (New York: W.

Economist, ‘Notso-clever Contracts’; BBC, ‘Hack Attack Drains Start-up Investment Fund’, BBC News, 21 June 2016 <http://www.bbc.co.uk/news/ technology-­36585930> (accessed 30 November 2017). Schwab, Klaus, The Fourth Industrial Revolution (Geneva: World Economic Forum, 2016), 19; Laura Shin, ‘The First Government to Secure Land Titles on the Bitcoin Blockchain Expands Project’, Forbes, 7 February 2017 <https://www.forbes.com/sites/laurashin/ 2017/02/07/the-first-government-to-secure-land-titles-onthe-bitcoin-blockchain-expands-project/#432b8b494dcd> (accessed 30 November 2017); Joon Ian Wong, ‘Sweden’s Block­ chain-powered Land Registry is Inching Towards Reality’, Quartz Media, 3 April 2017 <https://qz.com/947064/sweden-is-turninga-blockchain-powered-land-registry-into-a-reality/> (accessed 30 November 2017). Daniel Palmer, ‘Blockchain Startup to Secure 1 Million e-Health Records in Estonia’, CoinDesk, 3 March 2016 <http://www.coindesk. com/blockchain-startup-aims-to-secure-1-million-estonian-healthrecords/> (accessed 30 November 2017).

Harriet Green, ‘Govcoin’s Co-founder Robert Kay Explains Why His Firm is Using Blockchain to Change the Lives of Benefits Claimants’, City AM, 10 October 2016 <http://www.cityam.com/250993/ govcoins-co-founder-robert-kay-explains-why-his-firm-using> (accessed 30 November 2017). Kyle Mizokami, ‘The Pentagon Wants to Use Bitcoin Technology to Protect Nuclear Weapons’, Popular Mechanics, 11 October 2016 <http://www.popularmechanics.com/military/research/a23336/ the-pentagon-wants-to-use-bitcoin-technology-to-guardnuclearweapons/?utm_content=buffer98698&utm_medium= social&utm_source=twitter.com&utm_campaign=buffer> (accessed 30 November 2017). Nick Bostrom, Superintelligence: Paths, Dangers, Strategies (Oxford: Oxford University Press, 2014), ch. 10. Murray Shanahan, The Technological Singularity (Cambridge, Mass: MIT Press, 2015), 153.


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The End of Big: How the Internet Makes David the New Goliath by Nicco Mele

4chan, A Declaration of the Independence of Cyberspace, Airbnb, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, big-box store, bitcoin, business climate, call centre, Cass Sunstein, centralized clearinghouse, Chelsea Manning, citizen journalism, cloud computing, collaborative consumption, collaborative editing, commoditize, creative destruction, crony capitalism, cross-subsidies, crowdsourcing, David Brooks, death of newspapers, disruptive innovation, Donald Trump, Douglas Engelbart, Douglas Engelbart, en.wikipedia.org, Exxon Valdez, Fall of the Berlin Wall, Filter Bubble, Firefox, global supply chain, Google Chrome, Gordon Gekko, Hacker Ethic, Jaron Lanier, Jeff Bezos, jimmy wales, John Markoff, Julian Assange, Kevin Kelly, Khan Academy, Kickstarter, Lean Startup, Mark Zuckerberg, minimum viable product, Mitch Kapor, Mohammed Bouazizi, Mother of all demos, Narrative Science, new economy, Occupy movement, old-boy network, peer-to-peer, period drama, Peter Thiel, pirate software, publication bias, Robert Metcalfe, Ronald Reagan, Ronald Reagan: Tear down this wall, sharing economy, Silicon Valley, Skype, social web, Steve Jobs, Steve Wozniak, Stewart Brand, Stuxnet, Ted Nelson, Telecommunications Act of 1996, telemarketer, The Wisdom of Crowds, transaction costs, uranium enrichment, Whole Earth Catalog, WikiLeaks, Zipcar

A host of alternative currencies are blossoming on the Internet, and one in particular—an open-source project called Bitcoin—appears to be gaining steam. Bitcoin uses peer-to-peer technology to operate with no central authority, allowing anyone to send “money” (the Bitcoin currency) to anyone, anywhere, at any time, and beyond the reach of governments. Bitcoin enlists participants in the community to manage transactions and issue money; the network, rather than a central bank, collectively creates the money. Lest you think Bitcoin is a nerd pipe dream, many companies—even large, publicly traded ones like LaCie—accept Bitcoin as payment.10 In the opinion of the tech entrepreneur and journalist Jason Calacanis, “Bitcoin is a P2P currency that could topple governments, destabilize economies and create uncontrollable global bazaars for contraband.”11 Recently, Bitcoin has faced significant setbacks, but it is a promising opening salvo in the advent of alternative, postgovernment currency.

Joshua Holland, The Fifteen Biggest Lies about the Economy: And Everything Else the Right Doesn’t Want You to Know about Taxes, Jobs, and Corporate America (Hoboken: John Wiley, 2010), 105. 6. http://abcnews.go.com/blogs/politics/2012/01/congress-hits-a-new-low-in-approval-obama-opens-election-year-under-50/ 7. http://abcnews.go.com/blogs/politics/2012/02/frustration-index-still-hot-in-the-kitchen/ 8. http://pewresearch.org/pubs/1913/poll-trust-washington-anger-government-gay-marriage-support-abortion 9. Charlene Li and Josh Bernoff, The Groundswell, (Cambridge: Harvard Business Press, 2008). 10. http://www.wuala.com/en/bitcoin 11. http://www.launch.is/blog/l019-bitcoin-p2p-currency-the-most-dangerous-project-weve-ev.html 12. http://www.guardian.co.uk/media/2011/aug/08/london-riots-facebook-twitter-blackberry 13. http://articles.philly.com/2011-08-14/news/29886718_1_social-media-flash-mob-facebook-and-other-services 14. http://www.csmonitor.com/USA/2011/0815/Flash-mobs-vs.-law-and-order-BART-protest-adds-fresh-twist 15. http://www.nytimes.com/2010/03/07/magazine/07Human-t.html 16. http://gizmodo.com/5927379/the-secret-online-weapons-store-thatll-sell-anyone-anything 17.

Lest you think Bitcoin is a nerd pipe dream, many companies—even large, publicly traded ones like LaCie—accept Bitcoin as payment.10 In the opinion of the tech entrepreneur and journalist Jason Calacanis, “Bitcoin is a P2P currency that could topple governments, destabilize economies and create uncontrollable global bazaars for contraband.”11 Recently, Bitcoin has faced significant setbacks, but it is a promising opening salvo in the advent of alternative, postgovernment currency. It’s possible now to build some of the structures parallel to the government with very little start-up cost—like revenue collection, for example. As people find the current system of government slow and frustrating, they’ll increasingly turn to the casual opportunities offered by radical connectivity to accomplish many of the same goals, even to the point of using alternative money like Bitcoin. An astonishing range of tools exist that complement and in some ways could replace government if given the opportunity. The Limits of Small The groundswell is exciting, but is it an unmitigated good thing? Not really. In some ways, it makes effective governance more difficult. At a meeting of mayors from around the country that I attended, I kept hearing a common refrain: they were drowning in the volume of direct contact with constituents.


pages: 156 words: 15,746

Personal Finance with Python by Max Humber

asset allocation, backtesting, bitcoin, cryptocurrency, en.wikipedia.org, Ethereum, passive income, web application

Footnotes 1 https://www.anaconda.com/ 2 https://docs.anaconda.com/anaconda/install/ 3 www.numpy.org/ 4 https://www.crummy.com/software/BeautifulSoup/ 5 https://jupyter.org/ 6 https://nteract.io/ 7 https://github.com/nteract/nteract/blob/master/USER_GUIDE.md 8 https://stackoverflow.com/questions/39438049/how-to-set-the-default-python-path-for-anaconda © Max Humber 2018 Max HumberPersonal Finance with Pythonhttps://doi.org/10.1007/978-1-4842-3802-8_2 2. Profit Max Humber1 (1)Toronto, Ontario, Canada You know, you got to spend money to make money. —Chief Keef A couple of weeks ago my grandma asked me if she should put some money into Bitcoin. I didn’t know what to tell her. But I knew that in a book about finance I would have to at least give Bitcoin and cryptocurrencies at least a little bit of lip service. For the uninitiated, cryptocurrencies like Bitcoin (and Ethereum, Dogecoin, and Zcash) are digital assets that are designed to function as a medium of exchange and that use cryptography to secure transactions, to control the creation of new money, and to verify asset transfer. Because I think it’s hilarious, I’m going to use Dogecoin1 as the glue for the rest of this chapter.

With everything now inside of a class, we can instantiate a currency converter with this: API_KEY = os.environ.get("OPX_KEY") c = CurrencyConverter(['CAD', 'USD'], API_KEY) Converting values now just requires us to use the .convert method. print(c.convert(3000, 'CAD', 'USD')) print(c.convert(5000, 'USD', 'CAD')) 2302.35 6515.08 show_alternative The Open Exchange Rates API is incredibly robust, and it actually includes access points for alternative cryptocurrencies. This means that it’s totally legit to instantiate a new CurrencyConverter with ETH (Ethereum), BTC (Bitcoin), and DOGE (Dogecoin) on top of CAD and USD. c = CurrencyConverter(['CAD', 'USD', 'DOGE', 'ETH', 'BTC'], API_KEY) With all the currencies stored inside of a dictionary attached to the CurrencyConverter object: c.rates_ {'BTC': 0.00013350885, 'CAD': 1.303016, 'DOGE': 289.975486957, 'ETH': 0.0017451855, 'USD': 1} we can, again, run the .convert method and find out that $3,000 CAD is equal to the following: c.convert(3000, 'CAD', 'DOGE') 667625.31 .apply The whole point of this chapter was to figure out what the values from previous chapter were in USD instead of CAD.

Finally, please e-mail me if you have any concerns, questions, or comments about this book. Your feedback is tremendously valuable, and I will do my best to respond to each e-mail. Again, I can be reached via e-mail. max{dot}humber{at}gmail{dot}com I look forward to hearing from you! Index A Alpha Vantage API key TIME_SERIES_DAILY_ADJUSTED endpoint am function Amortization evaluate functionize Anaconda B Banks Bitcoin Budget adding vacation cash flow dates flows cash flow objects date_range function .fillna(0) method month start semi-month end fun object functionize time horizon pd.date_range function timestamp date-time.datetime object totals cumsum() .tail method updating visualization vanilla matplotlib YAML C CAD to USD, converting documentation encapsulate .apply show_alternative openexchangerates.org secrets Calendar object Canadian dollars (CAD) See alsoCAD to USD, converting Computer programming D, E, F, G, H Data Dates date formatting rules datetime.date objects datetime.datetime objects get_dates function Python DatetimeIndex object Dogecoin IRR =IRR() irregular cash flow schedule mining pandas read_excel function xirr function xnpv function ROI I Internal rate of return (IRR) Investment portfolio deposit function design adding cash .at method DataFrame instantiate_portfolio function reusable function get_order function prices gaps print(portfolio) function .update method rebalance simulate_process_order function stock quotes access Alpha Vantage API get_historical function get_price function J, K, L Jupyter M Month start frequency N, O nteract blank state macOS pip install P, Q Pandas DataFrame, .from_dict code Series Pandas 1.0 Payment loop A loop B Personal investment portfolio Prophet definition forecast datestamp column .make_future_dataframe method numeric column predict method purchases purchases.csv file visualize plot convenience method plot_components method Python floor division operator forecasting libraries programming R Recurrence rule (rrule) .between method Recurrent library S Semi-month-end frequency T Time Series (Daily) key Time-series forecasting Timestamp normalizing .normalize method to_datetime function U United States dollar (USD) See alsoCAD to USD, converting V, W, X Vacation budget Y, Z YAML Anaconda loading with block totals


pages: 466 words: 127,728

The Death of Money: The Coming Collapse of the International Monetary System by James Rickards

Affordable Care Act / Obamacare, Asian financial crisis, asset allocation, Ayatollah Khomeini, bank run, banking crisis, Ben Bernanke: helicopter money, bitcoin, Black Swan, Bretton Woods, BRICs, business climate, business cycle, buy and hold, capital controls, Carmen Reinhart, central bank independence, centre right, collateralized debt obligation, collective bargaining, complexity theory, computer age, credit crunch, currency peg, David Graeber, debt deflation, Deng Xiaoping, diversification, Edward Snowden, eurozone crisis, fiat currency, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, G4S, George Akerlof, global reserve currency, global supply chain, Growth in a Time of Debt, income inequality, inflation targeting, information asymmetry, invisible hand, jitney, John Meriwether, Kenneth Rogoff, labor-force participation, Lao Tzu, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, market clearing, market design, money market fund, money: store of value / unit of account / medium of exchange, mutually assured destruction, obamacare, offshore financial centre, oil shale / tar sands, open economy, plutocrats, Plutocrats, Ponzi scheme, price stability, quantitative easing, RAND corporation, reserve currency, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Satoshi Nakamoto, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, special drawing rights, Stuxnet, The Market for Lemons, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, trade route, undersea cable, uranium enrichment, Washington Consensus, working-age population, yield curve

Among them are the rise of alternative currencies and of virtual or digital currencies such as bitcoin. Digital currencies exist within private peer-to-peer computer networks and are not issued by or supported by any government or central bank. The bitcoin phenomenon began in 2008 with the pseudonymous publication of a paper (by Satoshi Nakamoto) describing the protocols for the creation of a new electronic digital currency. In January 2009 the first bitcoins were created by Nakamoto’s software. He continued making technical contributions to the bitcoin project until 2010, at which point he withdrew from active participation. However, by that time a large community of developers, libertarians, and entrepreneurs had taken up the project. By late 2013, over 11.5 million bitcoins were in circulation, with the number growing steadily. The value of each bitcoin fluctuates based on supply and demand, but it had exceeded $700 per bitcoin in November 2013.

By August 2013, total student loans backed . . . : “The Rolling Student Loan Bailout,” Wall Street Journal, August 9, 2013, http://online.wsj.com/article/SB10001424127887323968704578652291680883634.html. “the test of a first-rate intelligence . . .”: F. Scott Fitzgerald, The Crack-Up (1936; reprint New York: New Directions, 2009). The bitcoin phenomenon began in 2008 . . . : Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” November 1, 2008, http://bitcoin.org/bitcoin.pdf. the history of barter is mostly a myth: David Graeber, Debt: The First 5,000 Years (Brooklyn, N.Y.: Melville House, 2011), pp. 21–41. “Sept. 11 was not a failure of intelligence or coordination . . .”: Thomas L. Friedman, “A Failure to Imagine,” New York Times, May 19, 2002, http://www.nytimes.com/2002/05/19/opinion/a-failure-to-imagine.html.

The value of each bitcoin fluctuates based on supply and demand, but it had exceeded $700 per bitcoin in November 2013. Bitcoin’s long-term viability as a virtual currency remains to be seen, but its rapid and widespread adoption can already be taken as a sign that communities around the world are seeking alternatives to the dollar and traditional fiat currencies. Beyond the world of alternative currencies lies the world of transactions without currencies at all: the electronic barter market. Barter is one of the most misunderstood of economic concepts. A large economic literature is devoted to the inefficiencies of barter, which requires the simultaneous coincidence of wants between the two bartering parties. If one party wanted to trade wheat for nails, and the counterparty wanted wheat but had only rope to trade, the first party might accept the rope and go in search of someone with nails who wanted rope.


pages: 237 words: 64,411

Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence by Jerry Kaplan

Affordable Care Act / Obamacare, Amazon Web Services, asset allocation, autonomous vehicles, bank run, bitcoin, Bob Noyce, Brian Krebs, business cycle, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, combinatorial explosion, computer vision, corporate governance, crowdsourcing, en.wikipedia.org, Erik Brynjolfsson, estate planning, Flash crash, Gini coefficient, Goldman Sachs: Vampire Squid, haute couture, hiring and firing, income inequality, index card, industrial robot, information asymmetry, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Loebner Prize, Mark Zuckerberg, mortgage debt, natural language processing, Own Your Own Home, pattern recognition, Satoshi Nakamoto, school choice, Schrödinger's Cat, Second Machine Age, self-driving car, sentiment analysis, Silicon Valley, Silicon Valley startup, Skype, software as a service, The Chicago School, The Future of Employment, Turing test, Watson beat the top human players on Jeopardy!, winner-take-all economy, women in the workforce, working poor, Works Progress Administration

The first glimmers of this are already visible. Bitcoins, for instance. It’s a new currency that exists solely in cyberspace and isn’t controlled by anyone. It was invented by an anonymous person or entity named Satoshi Nakamoto. No one may know who—or what—he is, but it’s clear that he doesn’t control the production, management, or value of his creation. Despite halfhearted attempts to regulate or legitimize bitcoins, neither do governments. Or anyone else, for that matter. As long as they can be converted to and from other assets of value—whether legally or illegally anywhere in the world—bitcoins will continue to exist and find adherents. What’s not clear is whether “Nakamoto-san,” whoever or whatever he is, is profiting from the invention. It’s entirely possible that a private stash of bitcoins is growing in value, unseen and in secret.

It’s entirely possible that a private stash of bitcoins is growing in value, unseen and in secret. The entity that originated the concept may have billions of dollars in private bitcoins sequestered in an electronic file somewhere. (As of this writing, the total market value of all bitcoins is around $5 billion.) But the potential of the technology underlying bitcoins goes far beyond simple currencies. The concept is now being expanded to include enforceable, unbreakable contracts between anonymous parties.18 So in the future, it’s entirely possible for you to be hired, paid, and fired by someone or something whose identity you don’t know. Why would you tolerate this? For the money, of course. Computer viruses are another example of feral computer programs. They reproduce and sometimes even mutate to avoid detection. Regardless of how they started out, they often aren’t controlled by anyone.

Paul Miller, “iOS 5 includes Siri ‘Intelligent Assistant’ Voice-Control, Dictation—for iPhone 4S Only,” The Verge, October 4, 2011, http://www.theverge.com/2011/10/04/ios-5-assistant-voice-control-ai-features/. 17. Loren Schweninger, Black Property Owners in the South, 1790–1915 (Champaign: University of Illinois Press, 1997), 65–66. 18. Vitalik Buterin, “Cryptographic Code Obfuscation: Decentralized Autonomous Organizations Are About to Take a Huge Leap Forward,” Bitcoin, February 8, 2014, http://bitcoinmagazine.com/10055/cryptographic-code-obfuscation-decentralized-autonomous-organizations-huge-leap-forward/. 19. For an excellent in-depth analysis of this problem, see Nick Bostrom, Superintelligence (Oxford: Oxford University Press, 2014). 20. http://en.wikipedia.org/wiki/Anti-lock_braking_system, last modified December 30, 2014. Index Absolute Sound (magazine), 193 Accenture stock price, 63 accident avoidance.


pages: 501 words: 114,888

The Future Is Faster Than You Think: How Converging Technologies Are Transforming Business, Industries, and Our Lives by Peter H. Diamandis, Steven Kotler

Ada Lovelace, additive manufacturing, Airbnb, Albert Einstein, Amazon Mechanical Turk, augmented reality, autonomous vehicles, barriers to entry, bitcoin, blockchain, blood diamonds, Burning Man, call centre, cashless society, Charles Lindbergh, Clayton Christensen, clean water, cloud computing, Colonization of Mars, computer vision, creative destruction, crowdsourcing, cryptocurrency, Dean Kamen, delayed gratification, dematerialisation, digital twin, disruptive innovation, Edward Glaeser, Edward Lloyd's coffeehouse, Elon Musk, en.wikipedia.org, epigenetics, Erik Brynjolfsson, Ethereum, ethereum blockchain, experimental economics, food miles, game design, Geoffrey West, Santa Fe Institute, gig economy, Google X / Alphabet X, gravity well, hive mind, housing crisis, Hyperloop, indoor plumbing, industrial robot, informal economy, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invention of the telegraph, Isaac Newton, Jaron Lanier, Jeff Bezos, job automation, Joseph Schumpeter, Kevin Kelly, Kickstarter, late fees, Law of Accelerating Returns, life extension, lifelogging, loss aversion, Lyft, M-Pesa, Mary Lou Jepsen, mass immigration, megacity, meta analysis, meta-analysis, microbiome, mobile money, multiplanetary species, Narrative Science, natural language processing, Network effects, new economy, New Urbanism, Oculus Rift, out of africa, packet switching, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, Peter Thiel, QR code, RAND corporation, Ray Kurzweil, RFID, Richard Feynman, Richard Florida, ride hailing / ride sharing, risk tolerance, Satoshi Nakamoto, Second Machine Age, self-driving car, Silicon Valley, Skype, smart cities, smart contracts, smart grid, Snapchat, sovereign wealth fund, special economic zone, stealth mode startup, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, supercomputer in your pocket, supply-chain management, technoutopianism, Tesla Model S, Tim Cook: Apple, transaction costs, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, urban planning, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, X Prize

This is the double-spending problem and it’s exactly what bitcoin was designed to solve. Bitcoin appeared in 2008, when an online paper authored by a still-anonymous person (or persons) calling themselves Satoshi Nakamoto proposed a digital peer-to-peer payment system that allows cash to be exchanged without the need for a financial institution. The following year, the first bitcoin software was made public, yet because the coins had only been mined but not traded, there was no way to assign them monetary value. In 2010, Laszlo Hanyecz solved that problem, buying two pizzas—costing $25—with 10,000 bitcoins. At the time, based on the cost of those pizzas, the coins were worth $.0025 each. By 2019, they were just shy of $15,000. Yet the real revolution lies beneath bitcoin: blockchain technology. A blockchain is a distributed, mutable, permissible, and transparent digital ledger.

Blockchain were first proposed in 1983: David Chaum, “Blind Signatures for Untraceable Payments,” Advances in Cryptography (Springer 1998), pp. 199–203 See: http://blog.koehntopp.de/uploads/Chaum.BlindSigForPayment.1982.PDF. Satoshi Nakamoto: Satoshi Nakamotoe, “Bitcoin: A Peer-to-Peer Electronic Cash System.” See: https://bitcoin.org/bitcoin.pdf. In 2010, Laszlo Hanyecz solved that problem: Nick Bilton, “Disruptions: Betting on a Coin with no Realm,” New York Times, December 22, 2013. By 2019, they were just shy of $15,000: Data retreived from: https://coinmarketcap.com/currencies/bitcoin/. $308 billion: “Billion Reasons to Bank Inclusively.” See: https://www.accenture.com/us-en/_acnmedia/accenture/conversion-assets/dotcom/documents/global/pdf/dualpub_22/accenture-billion-reasons-bank-inclusively.pdf#zoom=50. is worth $600 billion: “Mitigation and Remittances,” World Bank Group, 2018.

Since understanding these stages will be indispensable to understanding the evolution of quantum computing (and the other technologies we’ll be discussing), they’re worth taking a moment to review: Digitalization: Once a technology becomes digital, meaning once you can translate it into the 1s and 0s of binary code, it jumps on the back of Moore’s Law and begins accelerating exponentially. Soon, with quantum, this will be on the back of Rose’s Law and an even wilder ride. Deception: Exponentials typically generate a lot of hype when first introduced. Because early progress is slow (when plotted on a curve, the first few doublings are all below 1.0), these technologies spend a long time failing to live up to the hype. Think about the initial days of Bitcoin. Back then, most people thought crypto was a novelty toy for übergeeks or a way to buy illegal drugs online. Today, it’s a reinvention of our financial markets. This is a classic example of the deceptive phase. Disruption: This is what happens when exponentials really start to impact the world, when they begin disrupting existing products, services, markets, and industries. An example is 3-D printing, a single exponential technology that threatens the entire $10 trillion manufacturing sector.


pages: 343 words: 101,563

The Uninhabitable Earth: Life After Warming by David Wallace-Wells

"Robert Solow", agricultural Revolution, Albert Einstein, anthropic principle, Asian financial crisis, augmented reality, basic income, Berlin Wall, bitcoin, British Empire, Buckminster Fuller, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon-based life, cognitive bias, computer age, correlation does not imply causation, cryptocurrency, cuban missile crisis, decarbonisation, Donald Trump, effective altruism, Elon Musk, endowment effect, energy transition, everywhere but in the productivity statistics, failed state, fiat currency, global pandemic, global supply chain, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, Joan Didion, John Maynard Keynes: Economic Possibilities for our Grandchildren, labor-force participation, life extension, longitudinal study, Mark Zuckerberg, mass immigration, megacity, megastructure, mutually assured destruction, Naomi Klein, nuclear winter, Pearl River Delta, Peter Thiel, plutocrats, Plutocrats, postindustrial economy, quantitative easing, Ray Kurzweil, rent-seeking, ride hailing / ride sharing, Sam Altman, Silicon Valley, Skype, South China Sea, South Sea Bubble, Steven Pinker, Stewart Brand, the built environment, the scientific method, Thomas Malthus, too big to fail, universal basic income, University of East Anglia, Whole Earth Catalog, William Langewiesche, Y Combinator

Americans waste a quarter of their food: Zach Conrad et al., “Relationship Between Food Waste, Diet Quality, and Environmental Sustainability,” PLOS One 13, no. 4 (April 2018), https://doi.org/10.1371/journal.pone.0195405. mining it consumes more electricity: Eric Holthaus, “Bitcoin’s Energy Use Got Studied, and You Libertarian Nerds Look Even Worse than Usual,” Grist, May 17, 2018, https://grist.org/article/bitcoins-energy-use-got-studied-and-you-libertarian-nerds-look-even-worse-than-usual. See also Alex de Vries, “Bitcoin’s Growing Energy Problem,” Cell 2, no. 5 (May 2018): pp. 801–5, https://doi.org/10.1016/j.joule.2018.04.016. Seventy percent of the energy: Nicola Jones, “Waste Heat: Innovators Turn to an Overlooked Renewable Resource,” Yale Environment 360, May 29, 2018. “Today, in the United States, most fossil fuel–burning power plants are about 33 percent efficient,” Jones writes, “while combined heat and power (CHP) plants are typically 60 to 80 percent efficient.”

Americans waste a quarter of their food, which means that the carbon footprint of the average meal is a third larger than it has to be. That need not continue. Five years ago, hardly anyone outside the darkest corners of the internet had even heard of Bitcoin; today mining it consumes more electricity than is generated by all the world’s solar panels combined, which means that in just a few years we’ve assembled, out of distrust of one another and the nations behind “fiat currencies,” a program to wipe out the gains of several long, hard generations of green energy innovation. It did not have to be that way. And a simple change to the algorithm could eliminate that Bitcoin footprint entirely. These are just a few of the reasons to believe that what the Canadian activist Stuart Parker has called “climate nihilism” is, in fact, another of our delusions. What happens, from here, will be entirely our own doing.

The planet’s future will be determined in large part by the arc of growth in the developing world—that’s where most of the people are, in China and India and, increasingly, sub-Saharan Africa. But this is no absolution for the West, where the average citizen produces many times more emissions than almost anyone in Asia, just out of habit. I toss out tons of wasted food and hardly ever recycle; I leave my air-conditioning on; I bought into Bitcoin at the peak of the market. None of that is necessary, either. But it also isn’t necessary for Westerners to adopt the lifestyle of the global poor. Seventy percent of the energy produced by the planet, it’s estimated, is lost as waste heat. If the average American were confined by the carbon footprint of her European counterpart, U.S. carbon emissions would fall by more than half. If the world’s richest 10 percent were limited to that same footprint, global emissions would fall by a third.


pages: 230 words: 76,655

Choose Yourself! by James Altucher

Airbnb, Albert Einstein, Bernie Madoff, bitcoin, cashless society, cognitive bias, dark matter, Elon Musk, estate planning, Mark Zuckerberg, money market fund, Network effects, new economy, PageRank, passive income, pattern recognition, payday loans, Peter Thiel, Ponzi scheme, Rodney Brooks, rolodex, Saturday Night Live, sharing economy, short selling, side project, Silicon Valley, Skype, software as a service, Steve Jobs, superconnector, Uber for X, Vanguard fund, Y2K, Zipcar

Fortunately for us, there are now forces at work to eliminate that. The software-based online payment system bitcoin is one such force. I don’t know whether bitcoin will work or if people will embrace this form of money exchange. But I keep track of it and I keep track of the companies that are innovating on top of it. I even released Choose Yourself! a month early last year as a bitcoin-only book. Someone wrote an article saying that Choose Yourself! was the best-selling book ever on bitcoin. CNBC had me on and asked, “Did you just do this as a marketing gimmick?” and I said, “Well, I’m on national TV right now, aren’t I?” Guess what domain name belonged to most of the people who bought the book using bitcoin: amazon.com. So whether or not bitcoin is the winner, I have no idea. But someone will win, and many people are looking at ways to do this.

And every time I have not invested in this approach it’s been a DISASTER. Like, a CLUSTERF*(*K Claudia doesn’t let me invest in a private company unless all four items on my checklist apply. Which is important because I tend to believe in everything people tell me. So I’m happy to invest in a time portal black hole machine. I) What Do You Think of Bitcoin? I think bitcoin has about a 1 in 100 chance of being a survivor. So I have 1% of my portfolio in bitcoin. J) What About Metals as a Hedge Against Inflation? No, they have zero correlation with inflation. The best hedge against inflation is the US stock market since about 60% of revenues of the S&P 500 come from foreign countries. K) What About Metals Like Gold? Don’t They Have Intrinsic Value? The only currency in the history of mankind that had actual intrinsic value was when people traded barley in the markets of the ancient city of Ur.


pages: 179 words: 43,441

The Fourth Industrial Revolution by Klaus Schwab

3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, Buckminster Fuller, call centre, clean water, collaborative consumption, commoditize, conceptual framework, continuous integration, crowdsourcing, digital twin, disintermediation, disruptive innovation, distributed ledger, Edward Snowden, Elon Musk, epigenetics, Erik Brynjolfsson, future of work, global value chain, Google Glasses, income inequality, Internet Archive, Internet of things, invention of the steam engine, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, life extension, Lyft, mass immigration, megacity, meta analysis, meta-analysis, more computing power than Apollo, mutually assured destruction, Narrative Science, Network effects, Nicholas Carr, personalized medicine, precariat, precision agriculture, Productivity paradox, race to the bottom, randomized controlled trial, reshoring, RFID, rising living standards, Sam Altman, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, smart cities, smart contracts, software as a service, Stephen Hawking, Steve Jobs, Steven Levy, Stuxnet, supercomputer in your pocket, TaskRabbit, The Future of Employment, The Spirit Level, total factor productivity, transaction costs, Uber and Lyft, uber lyft, Watson beat the top human players on Jeopardy!, WikiLeaks, winner-take-all economy, women in the workforce, working-age population, Y Combinator, Zipcar

The company also [released] a software development kit … that will allow third parties – like university robotics researchers – to create applications for Baxter.” In “The Robot Reality: Service Jobs Are Next to Go”, Blaire Briody, 26 March 2013, The Fiscal Times, http://www.cnbc.com/id/100592545 Shift 16: Bitcoin and the Blockchain The tipping point: 10% of global gross domestic product (GDP) stored on blockchain technology By 2025: 58% of respondents expected this tipping point to have occurred Bitcoin and digital currencies are based on the idea of a distributed trust mechanism called the “blockchain”, a way of keeping track of trusted transactions in a distributed fashion. Currently, the total worth of bitcoin in the blockchain is around $20 billion, or about 0.025% of global GDP of around $80 trillion. Positive impacts – Increased financial inclusion in emerging markets, as financial services on the blockchain gain critical mass – Disintermediation of financial institutions, as new services and value exchanges are created directly on the blockchain – An explosion in tradable assets, as all kinds of value exchange can be hosted on the blockchain – Better property records in emerging markets, and the ability to make everything a tradable asset – Contacts and legal services increasingly tied to code linked to the blockchain, to be used as unbreakable escrow or programmatically designed smart contracts – Increased transparency, as the blockchain is essentially a global ledger storing all transactions The shift in action Smartcontracts.com provides programmable contracts that do payouts between two parties once certain criteria have been met, without involving a middleman.

The technology that underpins the blockchain creates trust by enabling people who do not know each other (and thus have no underlying basis for trust) to collaborate without having to go through a neutral central authority – i.e. a custodian or central ledger. In essence, the blockchain is a shared, programmable, cryptographically secure and therefore trusted ledger which no single user controls and which can be inspected by everyone. Bitcoin is so far the best known blockchain application but the technology will soon give rise to countless others. If, at the moment, blockchain technology records financial transactions made with digital currencies such as Bitcoin, it will in the future serve as a registrar for things as different as birth and death certificates, titles of ownership, marriage licenses, educational degrees, insurance claims, medical procedures and votes – essentially any kind of transaction that can be expressed in code. Some countries or institutions are already investigating the blockchain’s potential.

Implantable Technologies 2. Our Digital Presence 3. Vision as the New Interface 4. Wearable Internet 5. Ubiquitous Computing 6. A Supercomputer in Your Pocket 7. Storage for All 8. The Internet of and for Things 9. The Connected Home 10. Smart Cities 11. Big Data for Decisions 12. Driverless Cars 13. Artificial Intelligence and Decision-Making 14. AI and White-Collar Jobs 15. Robotics and Services 16. Bitcoin and the Blockchain 17. The Sharing Economy 18. Governments and the Blockchain 19. 3D Printing and Manufacturing 20. 3D Printing and Human Health 21. 3D Printing and Consumer Products 22. Designer Beings 23. Neurotechnologies Notes Introduction Of the many diverse and fascinating challenges we face today, the most intense and important is how to understand and shape the new technology revolution, which entails nothing less than a transformation of humankind.


pages: 446 words: 117,660

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future by Paul Krugman

affirmative action, Affordable Care Act / Obamacare, Andrei Shleifer, Asian financial crisis, bank run, banking crisis, basic income, Berlin Wall, Bernie Madoff, bitcoin, blockchain, Bonfire of the Vanities, business cycle, capital asset pricing model, carbon footprint, Carmen Reinhart, central bank independence, centre right, Climategate, cognitive dissonance, cryptocurrency, David Ricardo: comparative advantage, different worldview, Donald Trump, Edward Glaeser, employer provided health coverage, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, frictionless, frictionless market, fudge factor, full employment, Growth in a Time of Debt, hiring and firing, illegal immigration, income inequality, index fund, indoor plumbing, invisible hand, job automation, John Snow's cholera map, Joseph Schumpeter, Kenneth Rogoff, knowledge worker, labor-force participation, large denomination, liquidity trap, London Whale, market bubble, market clearing, market fundamentalism, means of production, New Urbanism, obamacare, oil shock, open borders, Paul Samuelson, plutocrats, Plutocrats, Ponzi scheme, price stability, quantitative easing, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, universal basic income, very high income, working-age population

Cryptocurrencies, by contrast, have no backstop, no tether to reality. Their value depends entirely on self-fulfilling expectations—which means that total collapse is a real possibility. If speculators were to have a collective moment of doubt, suddenly fearing that Bitcoins were worthless, well, Bitcoins would become worthless. Will that happen? I think it’s more likely than not, partly because of the gap between the messianic rhetoric of crypto and the much more mundane real possibilities. That is, there might be a potential equilibrium in which Bitcoin (although probably not other cryptocurrencies) remain in use mainly for black market transactions and tax evasion, but that equilibrium, if it exists, would be hard to get to from here: once the dream of a blockchained future dies, the disappointment will probably collapse the whole thing.

Set against this history, the enthusiasm for cryptocurrencies seems very odd, because it goes exactly in the opposite of the long-run trend. Instead of near-frictionless transactions, we have high costs of doing business, because transferring a Bitcoin or other cryptocurrency unit requires providing a complete history of past transactions. Instead of money created by the click of a mouse, we have money that must be mined—created through resource-intensive computations. And these costs aren’t incidental, something that can be innovated away. As Markus Brunnermeier and Joseph Abadi point out, the high costs—making it expensive to create a new Bitcoin, or transfer an existing one—are essential to the project of creating confidence in a decentralized system. Banknotes worked because people knew something about the banks that issued them, and these banks had an incentive to preserve their reputation.

But you’re supposed to be sure that a Bitcoin is real without knowing who issued it, so you need the digital equivalent of biting a gold coin to be sure it’s the real deal, and the costs of producing something that satisfies that test have to be high enough to discourage fraud. In other words, cryptocurrency enthusiasts are effectively celebrating the use of cutting-edge technology to set the monetary system back three hundred years. Why would you want to do that? What problem does it solve? I have yet to see a clear answer to that question. Bear in mind that conventional money generally does its job quite well. Transaction costs are low. The purchasing power of a dollar a year from now is highly predictable—orders of magnitude more predictable than that of a Bitcoin. Using a bank account means trusting a bank, but by and large banks justify that trust, far more so than the firms that hold cryptocurrency tokens.


pages: 499 words: 144,278

Coders: The Making of a New Tribe and the Remaking of the World by Clive Thompson

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 4chan, 8-hour work day, Ada Lovelace, AI winter, Airbnb, Amazon Web Services, Asperger Syndrome, augmented reality, Ayatollah Khomeini, barriers to entry, basic income, Bernie Sanders, bitcoin, blockchain, blue-collar work, Brewster Kahle, Brian Krebs, Broken windows theory, call centre, cellular automata, Chelsea Manning, clean water, cloud computing, cognitive dissonance, computer vision, Conway's Game of Life, crowdsourcing, cryptocurrency, Danny Hillis, David Heinemeier Hansson, don't be evil, don't repeat yourself, Donald Trump, dumpster diving, Edward Snowden, Elon Musk, Erik Brynjolfsson, Ernest Rutherford, Ethereum, ethereum blockchain, Firefox, Frederick Winslow Taylor, game design, glass ceiling, Golden Gate Park, Google Hangouts, Google X / Alphabet X, Grace Hopper, Guido van Rossum, Hacker Ethic, HyperCard, illegal immigration, ImageNet competition, Internet Archive, Internet of things, Jane Jacobs, John Markoff, Jony Ive, Julian Assange, Kickstarter, Larry Wall, lone genius, Lyft, Marc Andreessen, Mark Shuttleworth, Mark Zuckerberg, Menlo Park, microservices, Minecraft, move fast and break things, move fast and break things, Nate Silver, Network effects, neurotypical, Nicholas Carr, Oculus Rift, PageRank, pattern recognition, Paul Graham, paypal mafia, Peter Thiel, pink-collar, planetary scale, profit motive, ransomware, recommendation engine, Richard Stallman, ride hailing / ride sharing, Rubik’s Cube, Ruby on Rails, Sam Altman, Satoshi Nakamoto, Saturday Night Live, self-driving car, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, single-payer health, Skype, smart contracts, Snapchat, social software, software is eating the world, sorting algorithm, South of Market, San Francisco, speech recognition, Steve Wozniak, Steven Levy, TaskRabbit, the High Line, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, universal basic income, urban planning, Wall-E, Watson beat the top human players on Jeopardy!, WikiLeaks, women in the workforce, Y Combinator, Zimmermann PGP, éminence grise

There was the Ubuntu lead coder who said in a speech that he was excited about their new software release because “we’ll have less trouble explaining to girls what we actually do.” There was the guy who, in a seminar on database queries, illustrated how to optimize queries with the example of ranking women by “hotness”—“WHERE sex=‘F’AND hotness>0 ORDER BY age LIMIT 10.” There was the leader of a Bitcoin meetup who responded to a female Facebook client-solutions manager who showed up, saying “You don’t look like someone who would even know about Bitcoin!,” followed by “Women don’t usually think in terms of efficiency and effectiveness.” (What’s more, another attendee groped her while she was there.) Women who talk about these sorts of experiences online face clear threats and harassment; when former Google engineer Kelly Ellis retweeted examples of harassment she got, it just invited even more.

ranking women by “hotness”: Andy Lester, “Distracting Examples Ruin Your Presentation,” Andy Lester (blog), July 26, 2011, accessed August 19, 2018, https://petdance.wordpress.com/2011/07/26/distracting-examples-ruin-your-presentation. “efficiency and effectiveness”: Arianna Simpson, “Here’s What It’s Like to Be a Woman at a Bitcoin Meetup,” Business Insider, February 3, 2014, accessed August 19, 2018, https://www.businessinsider.com/arianna-simpson-on-women-and-bitcoin-2014-2. to focus while coding: Rhett Jones, “Lawsuit: VR Company Had a ‘Kink Room,’ Pressured Female Employees to ‘Microdose,’ ” Gizmodo, May 15, 2017, accessed August 19, 2018, https://gizmodo.com/lawsuit-vr-company-had-a-kink-room-pressured-female-e-1795243868. The lawsuit was later settled out of court: Marisa Kendall, “Silicon Valley Virtual Reality Startup Settles ‘Kink Room’ Lawsuit,” The Mercury News, September 7, 2017, accessed October 7, 2018, https://gizmodo.com/lawsuit-vr-company-had-a-kink-room-pressured-female-e-1795243868.

The first version of Photoshop was created by two brothers; the version of BASIC that launched Microsoft in 1975 was hacked together in weeks by a young Bill Gates, his former schoolmate Paul Allen, and a Harvard freshman Monte Davidoff. An early and influential blogging tool, LiveJournal, was written by Brad Fitzpatrick. The breakthrough search algorithm that led to Google was a product of two students, Larry Page and Sergey Brin; YouTube was a trio of coworkers; Snapchat a trio (or, the level of the code, one person, Bobby Murphy). BitTorrent was entirely a creation of Bram Cohen, and Bitcoin was reputedly the work of a lone coder, the pseudonymous “Satoshi Nakamoto.” John Carmack created the 3-D-graphics engines that helped usher in the multi-billion-dollar industry of first-person shooter video games. The reason so few people can have such an outsize impact, Andreessen argues, is that when you’re creating a weird new prototype of an app, the mental castle building is most efficiently done inside one or two isolated brains.


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The Stack: On Software and Sovereignty by Benjamin H. Bratton

1960s counterculture, 3D printing, 4chan, Ada Lovelace, additive manufacturing, airport security, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, algorithmic trading, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, basic income, Benevolent Dictator For Life (BDFL), Berlin Wall, bioinformatics, bitcoin, blockchain, Buckminster Fuller, Burning Man, call centre, carbon footprint, carbon-based life, Cass Sunstein, Celebration, Florida, charter city, clean water, cloud computing, connected car, corporate governance, crowdsourcing, cryptocurrency, dark matter, David Graeber, deglobalization, dematerialisation, disintermediation, distributed generation, don't be evil, Douglas Engelbart, Douglas Engelbart, Edward Snowden, Elon Musk, en.wikipedia.org, Eratosthenes, Ethereum, ethereum blockchain, facts on the ground, Flash crash, Frank Gehry, Frederick Winslow Taylor, future of work, Georg Cantor, gig economy, global supply chain, Google Earth, Google Glasses, Guggenheim Bilbao, High speed trading, Hyperloop, illegal immigration, industrial robot, information retrieval, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invisible hand, Jacob Appelbaum, Jaron Lanier, Joan Didion, John Markoff, Joi Ito, Jony Ive, Julian Assange, Khan Academy, liberal capitalism, lifelogging, linked data, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Masdar, McMansion, means of production, megacity, megastructure, Menlo Park, Minecraft, MITM: man-in-the-middle, Monroe Doctrine, Network effects, new economy, offshore financial centre, oil shale / tar sands, packet switching, PageRank, pattern recognition, peak oil, peer-to-peer, performance metric, personalized medicine, Peter Eisenman, Peter Thiel, phenotype, Philip Mirowski, Pierre-Simon Laplace, place-making, planetary scale, RAND corporation, recommendation engine, reserve currency, RFID, Robert Bork, Sand Hill Road, self-driving car, semantic web, sharing economy, Silicon Valley, Silicon Valley ideology, Slavoj Žižek, smart cities, smart grid, smart meter, social graph, software studies, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Startup school, statistical arbitrage, Steve Jobs, Steven Levy, Stewart Brand, Stuxnet, Superbowl ad, supply-chain management, supply-chain management software, TaskRabbit, the built environment, The Chicago School, the scientific method, Torches of Freedom, transaction costs, Turing complete, Turing machine, Turing test, undersea cable, universal basic income, urban planning, Vernor Vinge, Washington Consensus, web application, Westphalian system, WikiLeaks, working poor, Y Combinator

Would it do more to ground money in a marking fabrication of total debt that is more relevant to economies defined by the paradoxes of Anthropocenic growth? Speaking of reserve currencies, Bitcoin introduces addressable scarcity not in direct relation to the sum of mined minerals or national currencies, but by the mathematics of solving increasingly difficult problems toward an eventual arbitrary limit of 21 million “coins.” There is much to explore with Bitcoin, blockchains and related initiatives, such as Ethereum, but it is also the monetary platform of choice of secessionist projects for which the metaphysical expulsion of externalities is the paramount program, as important if not more than the disintermediation of central banks. The version of Bitcoin that we have (other currencies may fork or follow) is exemplary of the future-archaic quality of many Stack innovations.

The smart grid is also a recording medium for the immanent representation of all things, passing through signification, toward enable an angelic harmony of things. See Sol Yurick, Metatron: The Recording Angel (Los Angeles: Semtiotext(e), 1985). 54.  The weight of virtual systems is amplified by the weight of virtual systems that monitor and mediate virtual systems. Consider the impact of bitcoin and coin mining. The key innovation is that “the work needed to commit a fraud is set to be higher in electricity costs than the economic benefit derived from it.” See http://www.bloomberg.com/news/2013-04-12/virtual-bitcoin-mining-is-a-real-world-environmental-disaster.html and http://www.computerworld.com.au/article/458439/cloud_real_ecological_timebomb_wireless_data_centres/. 55.  The Singularity born of spam is a plot device in Charles Stross, Rule 34 (New York: Ace, 2011). 56.  Mark P. Milles, “The Cloud Begins with Coal,” August 2013, http://www.tech-pundit.com/wp-content/uploads/2013/07/Cloud_Begins_With_Coal.pdf. 57. 

It is, as Paul Krugman puts it, “both a 17th century and 21st century currency at once,” a currency mechanism that would freeze the sum total of possible liquid value tokens in the world, now and forever.64 In this regard, for certain persuasions, it is better than magic rocks (like gold) because incrementally more gold can always be mined, allowing rootless cosmopolitans to upset “the natural order” of hierarchical hereditary accumulation. If nothing else, Bitcoin has made money into a general design problem, as it should be, and not just the design of financial products or the look of paper bills, but of vessel abstractions of time, debt, work, and prestige. Better alternatives are needed soon, before today's digital platform currencies are prematurely entrenched in the wrong direction (artificially attenuated to closure and scarcity of the wrong stuff). Bitcoins also appear not only in mathematical space but through the energy-intensive mining of coins using special hardware with names like AntMiner, Minerscube, TerraHash HashCoins, and so on. The math is a function of the processing power of the servers, which is also a function of the amount of energy that a server pulls, which for some custom clusters is tremendous.


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Targeted: The Cambridge Analytica Whistleblower's Inside Story of How Big Data, Trump, and Facebook Broke Democracy and How It Can Happen Again by Brittany Kaiser

Albert Einstein, Amazon Mechanical Turk, Asian financial crisis, Bernie Sanders, bitcoin, blockchain, Boris Johnson, Burning Man, call centre, centre right, Chelsea Manning, clean water, cognitive dissonance, crony capitalism, Dominic Cummings, Donald Trump, Edward Snowden, Etonian, haute couture, illegal immigration, Julian Assange, Mark Zuckerberg, Menlo Park, Nelson Mandela, off grid, open borders, Renaissance Technologies, Robert Mercer, rolodex, sentiment analysis, Silicon Valley, Silicon Valley startup, Skype, Snapchat, statistical model, the High Line, the scientific method, WikiLeaks, young professional

Every transaction is recorded publicly, and once enough transactions are gathered, they are put into one “block” of data that is “chained” to every other block of data since the platform’s inception. In order to edit a transaction, someone would need to hack every block ever made before that transaction, which has never been done. My eyes were open, and I was listening. I had known about the underlying technology of blockchain for a while; the earliest solution was Bitcoin. I’d first heard about Bitcoin in 2009—some of my human rights friends were tipping one another with it (sending Bitcoin as a thank-you for work or information) when running underground operations to move North Korean refugees out of harm’s way and to a place that would give them asylum. What made blockchain so revolutionary was that it was a completely new “electronic cash system that was fully peer-to-peer, with no trusted third party,” so, at the time, it was an ideal way to provide value without being tracked by governments.1 Now, so many years later, I had seen Big Data exploit users; I’d seen how it could be toxic enough to alter the very basis of democracy in both the United States and Britain.

Somewhere, I had a small stash of Bitcoin, but I wasn’t sure how that would get me where I needed to go. At least my location couldn’t be traced while using it, and no government could freeze my account, but it wasn’t enough to get me very far away. I got in touch with Chester, the person with whom everything had begun on a winter’s day in 2014. I’m in trouble, I told him. A lot of things were about to come out, and I needed to leave the country. He didn’t even pause. “Where to?” he asked. I said Thailand. There was a certain island I could go to. We got off the phone, and within an hour he’d booked and paid for a flight; he sent me the confirmation number. In the meantime, I’d hide out. I called my sister and asked her to liquidate the Bitcoin I had, explaining to her how to do it, where to go to a Bitcoin ATM near her, and how to send it to me via Western Union, so I wouldn’t create as much trackable data by swiping my bank card.

And I found Assange’s choice to leak documents on the U.S. military’s involvement in war crimes in Iraq heroic—in fact, as I’ve mentioned, I had written my graduate thesis for my LLM (or “master of laws”) on war crimes using WikiLeaks’s data dumps as my primary source material. And in 2011, when WikiLeaks donations were blocked by major credit card companies, the nonprofit had launched a widget to donate using Bitcoin instead—I donated a couple of hundred dollars’ worth in recognition of the research the organization had allowed me to do. While I was incredibly skeptical of Wikileaks’ choice to leak Hillary Clinton’s emails during the election, at first I felt there had to have been a reason for the organization to do so. But after there were no explosive revelations, it seemed that this had been done to affect voter perception.


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The Fifth Domain: Defending Our Country, Our Companies, and Ourselves in the Age of Cyber Threats by Richard A. Clarke, Robert K. Knake

A Declaration of the Independence of Cyberspace, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, Amazon Web Services, autonomous vehicles, barriers to entry, bitcoin, Black Swan, blockchain, borderless world, business cycle, business intelligence, call centre, Cass Sunstein, cloud computing, cognitive bias, commoditize, computer vision, corporate governance, cryptocurrency, data acquisition, DevOps, don't be evil, Donald Trump, Edward Snowden, Exxon Valdez, global village, immigration reform, Infrastructure as a Service, Internet of things, Jeff Bezos, Julian Assange, Kubernetes, Mark Zuckerberg, Metcalfe’s law, MITM: man-in-the-middle, move fast and break things, move fast and break things, Network effects, open borders, platform as a service, Ponzi scheme, ransomware, Richard Thaler, Sand Hill Road, Schrödinger's Cat, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, Skype, smart cities, Snapchat, software as a service, Steven Levy, Stuxnet, technoutopianism, Tim Cook: Apple, undersea cable, WikiLeaks, Y2K, zero day

Then comes the ransom offer. Want the key to unlock everything we encrypted? Then send us one hundred thousand dollars’ worth of Bitcoin. Although Bitcoin was supposed to be a safe way of doing business because it involved a publicly viewable blockchain record, it has actually turned out to be easy to use it to hide money flows. Bitcoin is the coin of the realm when it comes to ransomware, allegedly very difficult to trace. Faramarz Savandi and Mohammad Mansouri knew how to do it. The two Iranians wrote their own version of ransomware software and it became known as the SamSam kit. The two men hit about two hundred networks in the United States over two years and collected more than $6 million in Bitcoin. The damage that their ransomware did to networks was estimated at $30 million. Among their victims were numerous hospitals and medical facilities (MedStar Georgetown, Kansas Heart Hospital, Hollywood Presbyterian, LabCorps), and city governments and agencies (Atlanta, Newark, the Port of San Diego).

Colchester Hospital canceled twenty-five operations. At Chesterfield Royal Hospital the problem was the reverse: without functioning computers, patients could not be released and had to spend another night in the hospital. It was May 12, 2017, and the British National Health Service had been hit by a ransomware cyberattack that was shutting down businesses all over Europe and North America, locking down computers and demanding payment in Bitcoin to unlock them. The attack tool used became known as WannaCry, and seven months later the Australian, British, and American governments identified the culprit as one of the North Korean government’s hacking groups, sometimes called the Lazarus Group by Western analysts. While WannaCry captured the media’s attention in the United States and many other countries, the events in May were only a prelude to a much more devastating attack a month later by another state actor.

Calling for a Ransomed Friend “I have a friend whose company just got hit. All of their data got encrypted. Do you think they should pay the ransom?” We have had more than a few calls like that. We usually say that the answer is probably yes, you should pay, unless you have multiple, reliable, backup databases. Then our callers often respond, “Okay, then do you know where I can buy some Bitcoin?” In 2017 and 2018, there was a near pandemic of ransomware in North America and Europe. According to the Royal Canadian Mounted Police, sixteen hundred ransomware attacks were occurring each day in Canada in 2015. By the fall of 2016, the attacks almost doubled. As we said, a pandemic. Hackers could easily buy attack kits that would find vulnerabilities that allowed them to go from publicly facing web pages or email servers into an entire corporate network.


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The Hacker and the State: Cyber Attacks and the New Normal of Geopolitics by Ben Buchanan

active measures, Bernie Sanders, bitcoin, blockchain, borderless world, Brian Krebs, British Empire, Cass Sunstein, citizen journalism, credit crunch, cryptocurrency, cuban missile crisis, data acquisition, Donald Trump, drone strike, Edward Snowden, family office, hive mind, Internet Archive, Jacob Appelbaum, John Markoff, John von Neumann, Julian Assange, Kickstarter, kremlinology, MITM: man-in-the-middle, Nate Silver, profit motive, RAND corporation, ransomware, risk tolerance, Robert Hanssen: Double agent, rolodex, Ronald Reagan, Silicon Valley, South China Sea, Steve Jobs, Stuxnet, technoutopianism, undersea cable, uranium enrichment, Vladimir Vetrov: Farewell Dossier, WikiLeaks, zero day

The group began the new year with a series of tweets mocking those who thought Russians interfered in the 2016 American election.25 On January 7, they posted another message announcing they would now also sell NSA tools for hacking Windows.26 Only a few days later, the Shadow Brokers issued what they called a “farewell” post, claiming that since not enough people were paying them, they were going to shut down rather than bear the risk of continued operations. “Despite theories, it always being about bitcoins for TheShadowBrokers,” they wrote. “Free dumps and bullshit political talk was being for marketing attention.”27 To back this up, they posted their bitcoin address one more time, suggesting that the NSA’s tools would still be for sale if the right buyer came along. Two links at the bottom of the farewell message were small but packed a mighty punch. These links enabled anyone to download sixty-one different NSA hacking tools, including some that could bypass the leading antivirus software without detection.

The North Koreans preconfigured that malicious code to act against more than a hundred institutions from all over the world, primarily banks and telecommunications companies. The list of targets included the World Bank, central banks from countries such as Brazil, Chile, and Mexico, and many other prominent financial firms.16 Nor did the North Koreans limit themselves to seeking out traditional currencies. Their campaign included a series of efforts to steal increasingly valuable cryptocurrencies like Bitcoin from unsuspecting users all over the world. They also targeted a significant number of Bitcoin exchanges, including a major one in South Korea known as YouBit. In that case, the exchange lost 17 percent of its financial assets to North Korean hackers, though it refused to specify how much that amounted to in absolute terms.17 One estimate from Group-IB, a cybersecurity company, pegged North Korea’s profit from some of their little-noticed operations against cryptocurrency exchanges at more than $500 million.18 While it is impossible to confirm this estimate or the details of the hacks on cryptocurrency exchanges, the size of the reported loss emphasizes the degree to which the North Koreans have plundered smaller and more private financial institutions, almost entirely out of view.

Here’s What We Know,” Wired, May 17, 2016. 15. This was a different intrusion in a different country than the North Koreans’ breach of TPBank in Vietnam, which also occurred in late 2015. 16. Jose Pagliery, “North Korea-Linked Hackers Are Attacking Banks Worldwide,” CNN, April 4, 2017. 17. Elizabeth Shim, “North Korea Targeted Bitcoin Exchange in Hacking Attempt, Expert Says,” UPI, August 24, 2017; Timothy W. Martin, Eun-Young Joeng, and Steven Russolillo, “North Korea Is Suspected in Bitcoin Heist,” Wall Street Journal, December 20, 2017. 18. Because the thefts are of cryptocurrency, their estimated dollar values fluctuate with the price of the currency. David Canellis, “North Korean Hacker Crew Steals $571M in Cryptocurrency across 5 Attacks,” The Next Web (TNW) News, October 19, 2018. 19. Kaspersky Lab Global Research and Analysis Team, “Lazarus Under the Hood,” report, April 3, 2017; Dmitry Volkov, “Lazarus Arisen Architecture, Techniques, and Attribution,” Group-IB Threat Intelligence Department, May 30, 2017; Kate Kochetkova, “What Is Known About the Lazarus Group: Sony Hack, Military Espionage, Attacks on Korean Banks and Other Crimes,” Kaspersky Daily, February 24, 2016. 20.


The Ethical Algorithm: The Science of Socially Aware Algorithm Design by Michael Kearns, Aaron Roth

23andMe, affirmative action, algorithmic trading, Alvin Roth, Bayesian statistics, bitcoin, cloud computing, computer vision, crowdsourcing, Edward Snowden, Elon Musk, Filter Bubble, general-purpose programming language, Google Chrome, ImageNet competition, Lyft, medical residency, Nash equilibrium, Netflix Prize, p-value, Pareto efficiency, performance metric, personalized medicine, pre–internet, profit motive, quantitative trading / quantitative finance, RAND corporation, recommendation engine, replication crisis, ride hailing / ride sharing, Robert Bork, Ronald Coase, self-driving car, short selling, sorting algorithm, speech recognition, statistical model, Stephen Hawking, superintelligent machines, telemarketer, Turing machine, two-sided market, Vilfredo Pareto

Extrapolating a bit, we can imagine what might go wrong for similar reasons when we unleash an algorithm designed to optimize for a seemingly mundane task. Suppose we program a superpowerful optimization algorithm for a simple goal: mine as many bitcoins as possible within the next decade. Mining bitcoins requires solving a difficult computational problem, for which it is thought that there is no algorithm substantially better than brute-force search. One strategy that the algorithm could employ is to devote all of its computational power directly to these brute-force search problems and solve as many of them as possible within the next decade. This is what existing bitcoin miners do. But the algorithm’s objective motivates it to find a better solution if one is available. With a bit of inspiration from science fiction, you can imagine dystopian solutions that would be improvements on the algorithm’s narrowly defined objective function but which we didn’t intend—including the forced reorientation of society’s resources and even human civilization toward building bitcoin-mining rigs.

With a bit of inspiration from science fiction, you can imagine dystopian solutions that would be improvements on the algorithm’s narrowly defined objective function but which we didn’t intend—including the forced reorientation of society’s resources and even human civilization toward building bitcoin-mining rigs. There are a couple of simple objections to these kinds of doomsday scenarios, but many of them can be dispatched with a little imagination. Perhaps the most obvious is “Why don’t we just turn the computer off once we realize it is starting to exhibit these unintended behaviors?” But if the computer is turned off, it will have mined fewer bitcoins than if it had been left on. And remember, the computer is running a superpowerful optimization algorithm, so it is unlikely to miss this simple observation. So it should take steps to prevent anyone from turning it off—not because it has any particular instinct for self-preservation, but rather because turning it off would get in the way of optimizing its objective.

See also p-hacking advantages of machine learning, 190–93 advertising, 191–92 Afghanistan, 50–51 age data, 27–29, 65–66, 86–89 aggregate data, 2, 30–34, 50–51 AI labs, 145–46 alcohol use data, 51–52 algebraic equations, 37 algorithmic game theory, 100–101 Amazon, 60–61, 116–17, 121, 123, 125 analogies, 57–63 anonymization of data “de-anonymizing,” 2–3, 14–15, 23, 25–26 reidentification of anonymous data, 22–31, 33–34, 38 shortcomings of anonymization methods, 23–29 and weaknesses of aggregate data, 31–32 Apple, 47–50 arbitrary harms, 38 Archimedes, 160–62 arms races, 180–81 arrest data, 92 artificial intelligence (AI), 13, 176–77, 179–82 Atari video games, 132 automation, 174–78, 180 availability of data, 1–3, 51, 66–67 averages, 40, 44–45 backgammon, 131 backpropagation algorithm, 9–10, 78–79, 145–46 “bad equilibria,” 95, 97, 136 Baidu, 148–51, 166, 185 bans on data uses, 39 Bayesian statistics, 38–39, 173 behavioral data, 123 benchmark datasets, 136 Bengio, Yoshua, 133 biases and algorithmic fairness, 57–63 and data collection, 90–93 and word embedding, 58–63, 77–78 birth date information, 23 bitcoin, 183–84 blood-type compatibility, 130 board games, 131–32 Bonferroni correction, 149–51, 153, 156, 164 book recommendation algorithms, 117–21 Bork, Robert, 24 bottlenecks, 107 breaches of data, 32 British Doctors Study, 34–36, 39, 51 brute force tasks, 183–84, 186 Cambridge University, 51–52 Central Intelligence Agency (CIA), 49–50 centralized differential privacy, 46–47 chain reaction intelligence growth, 185 cheating, 115, 148, 166 choice, 101–3 Chrome browser, 47–48, 195 classification of data, 146–48, 152–55 cloud computing, 121–23 Coase, Ronald, 159 Coffee Meets Bagel (dating app), 94–97, 100–101 coin flips, 42–43, 46–47 Cold War, 100 collaborative filtering, 23–24, 116–18, 123–25 collective behavioral data, 105–6, 109, 123–24 collective good, 112 collective language, 64 collective overfitting, 136.


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Click Here to Kill Everybody: Security and Survival in a Hyper-Connected World by Bruce Schneier

23andMe, 3D printing, autonomous vehicles, barriers to entry, bitcoin, blockchain, Brian Krebs, business process, cloud computing, cognitive bias, computer vision, connected car, corporate governance, crowdsourcing, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Heinemeier Hansson, Donald Trump, drone strike, Edward Snowden, Elon Musk, fault tolerance, Firefox, Flash crash, George Akerlof, industrial robot, information asymmetry, Internet of things, invention of radio, job automation, job satisfaction, John Markoff, Kevin Kelly, license plate recognition, loose coupling, market design, medical malpractice, Minecraft, MITM: man-in-the-middle, move fast and break things, move fast and break things, national security letter, Network effects, pattern recognition, profit maximization, Ralph Nader, RAND corporation, ransomware, Rodney Brooks, Ross Ulbricht, security theater, self-driving car, Shoshana Zuboff, Silicon Valley, smart cities, smart transportation, Snapchat, Stanislav Petrov, Stephen Hawking, Stuxnet, The Market for Lemons, too big to fail, Uber for X, Unsafe at Any Speed, uranium enrichment, Valery Gerasimov, web application, WikiLeaks, zero day

I can set programs for when I am home and when I am away and monitor the temperature inside the house—all remotely. It’s perfect. Unfortunately, I also opened myself up to some potential problems. In 2017, a hacker bragged on the Internet that he was able to remotely hijack the Heatmiser smart thermostat—not the brand I have. Separately, a group of researchers demonstrated ransomware against two popular American thermostat brands—again, not mine—demanding payment in bitcoin to relinquish control. And if they could plant ransomware, they could also have recruited that thermostat into a bot network and used it to attack other sites on the Internet. This was a research project; no operational thermostats were harmed in the process, and no water pipes burst as a result. But next time might be my brand, and might not be so harmless. The Internet+ means two things when it comes to security.

Criminals steal money from our bank accounts. They steal our credit card data and use it to commit fraud, or they steal our identity information and use that. They also lock up our data and then try to coerce us into paying for its return—that’s ransomware. In early 2018, the Indiana hospital Hancock Health was the victim of a cyberattack. Criminals—we have no idea who—encrypted its computers and demanded $55,000 in bitcoin to unlock them. Medical staff had no access to computerized medical records. Even though they had backups, they feared that the time required to restore the data would put patients at risk. They paid up. Ransomware is increasingly common and lucrative. Victims range from organizations, as in the preceding story, to individuals. Kaspersky Lab reported that attacks on business tripled, and the number of different ransomware variants increased 11-fold, during nine months in 2016.

This ploy can be very effective if the criminal does his research; we are all used to treating e-mails from the boss as legitimate and important. There’s more. A lot of cybercrime follows from this question: I’ve hacked into all of these computers; now what can I do with them? Turns out that the answer is: plenty. Criminals have harnessed large numbers of hacked computers into bot, or zombie, networks. Botnets can be used for all sorts of things: sending spam at high rates, solving CAPTCHAs, and mining bitcoin. Hackers use bots to commit click fraud: repeatedly clicking on ads on sites they control and collecting revenue from the third parties that place them, or clicking on ads placed by competitors and forcing them to pay. They use massive botnets to launch DDoS attacks against other victims. If you control millions of bots, you can use them to overwhelm the Internet connections of individuals and even companies, and kick them off the Internet.


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Team Human by Douglas Rushkoff

1960s counterculture, autonomous vehicles, basic income, Berlin Wall, big-box store, bitcoin, blockchain, Burning Man, carbon footprint, clean water, clockwork universe, cloud computing, collective bargaining, corporate personhood, disintermediation, Donald Trump, drone strike, European colonialism, Filter Bubble, full employment, future of work, game design, gig economy, Google bus, Gödel, Escher, Bach, Internet of things, invention of the printing press, invention of writing, invisible hand, iterative process, Kevin Kelly, knowledge economy, life extension, lifelogging, Mark Zuckerberg, Marshall McLuhan, means of production, new economy, patient HM, pattern recognition, peer-to-peer, Peter Thiel, Ray Kurzweil, recommendation engine, ride hailing / ride sharing, Ronald Reagan, Ronald Reagan: Tear down this wall, shareholder value, sharing economy, Silicon Valley, social intelligence, sovereign wealth fund, Steve Jobs, Steven Pinker, Stewart Brand, technoutopianism, theory of mind, trade route, Travis Kalanick, Turing test, universal basic income, Vannevar Bush, winner-take-all economy, zero-sum game

The argument merely reinforces the human obligation to keep consuming, or to keep working for an unlivable wage. More countercultural solutions, such as bitcoin and the blockchain, are no less technosolutionist in spirit. The blockchain replaces the need for central authorities such as banks by letting everyone on a network authenticate their transactions with computer encryption. It may disintermediate exploitative financial institutions but it doesn’t help rehumanize the economy, or reestablish the trust, cohesion, and ethos of mutual aid that was undermined by digital capitalism. It simply substitutes for trust in a different way: using the energy costs of blockchain mining as a security measure against counterfeiting or other false claims. (The computer power needed to create one bitcoin consumes at least as much electricity as the average American household burns through in two years.)

., foreword, The Shift Index 2013: The 2013 Shift Index Series (New York: Deloitte, 2013). 48. One or two superstars get all the plays, and everyone else sells almost nothing M. J. Salganik, P. S. Dodds, and D. J. Watts, “Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market,” Science 311 (2006). The computer power needed to create one bitcoin Nathaniel Popper, “There Is Nothing Virtual About Bitcoin’s Energy Appetite,” New York Times, January 21, 2018. 49. The CEO of a typical company in 1960 made about 20 times as much as its average worker David Leonhardt, “When the Rich Said No to Getting Richer,” New York Times, September 5, 2017. “holding a wolf by the ear” Thomas Jefferson, letter to John Holmes, April 22, 1820, avail­able at https://www.encyclopediavirginia.org/Letter_from_Thomas_Jefferson_to_John_Holmes_April_22_1820.


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