[P2P-F] Bitcoin P2P Currency: The Most Dangerous Project We've Ever Seen (confirms libertarian bias of project)

Fri May 20 00:19:26 CEST 2011

---------- Forwarded message ----------
From: Amaia Arcos <amaia.arcos at googlemail.com>
Date: Thu, May 19, 2011 at 5:04 PM
Subject: Fwd: L019: Bitcoin P2P Currency: The Most Dangerous Project We've
Ever Seen
To: michelsub2004 at gmail.com

---------- Forwarded message ----------
From: Jason Calacanis <jmc at launch.is>
Date: 15 May 2011 21:17
Subject: L019: Bitcoin P2P Currency: The Most Dangerous Project We've Ever
Seen
To: amaia.arcos at gmail.com

L019: Bitcoin P2P Currency: The Most Dangerous Project We've Ever Seen

by Jason Calacanis and the LAUNCH team

A month ago I heard folks talking online about a virtual currency called
bitcoin that is untraceable and un-hackable. Folks were using it to buy and
sell drugs online, support content they liked and worst of all -- gasp! --
play poker.

Bitcoin is a P2P currency that could topple governments, destabilize
economies and create uncontrollable global bazaars for contraband.

I sent the 30 or so producers of my show This Week in Startups out to
research the top players, and we did a show on Bitcoin on May 10 [
http://bit.ly/TWIST-140 ]. Since that time the number of bitcoin stories has
surged [ see http://lnch.is/L019-bitcoin ].

After month of research and discovery, we’ve learned the following:

1. Bitcoin is a technologically sound project.
2. Bitcoin is unstoppable without end-user prosecution.
3. Bitcoin is the most dangerous open-source project ever created.
4. Bitcoin may be the most dangerous technological project since the
internet itself.
5. Bitcoin is a political statement by technotarians (technological
libertarians).*
6. Bitcoins will change the world unless governments ban them with harsh
penalties.

What Are Bitcoins?
=========
Bitcoins are virtual coins in the form of a file that is stored on your
device. These coins can be sent to and from users three ways:

1. Direct with peer-to-peer software downloaded at bitcoin.org
2. Via an escrow service like ClearCoin
3. Via a bitcoin currency exchange

Each owner transfers the coin to the next by digitally signing a hash of the
previous transaction and the public key of the next owner and adding these
to the end of the coin. A payee can verify the signatures to verify the
chain of ownership.

The benefits of a currency like this:

a) Your coins can’t be frozen (like a Paypal account can be)
b) Your coins can’t be tracked
c) Your coins can’t be taxed
d) Transaction costs are extremely low (sorry credit card companies)

You can watch a simple video here: http://jc.is/jlcte0

Where Do Bitcoins Come from?
=========
Bitcoins are created by a complex algorithm. Only 21M can be made by the
year 2140. Your desktop bitcoin software can make bitcoins, but at this
point the electricity and time it would take to produce a bitcoin is larger
than the actual value of a bitcoin (your laptop might take five years to
make one, and they currently trade at $6.70 per bitcoin [ see
https://mtgox.com/trade/buy for the latest exchange rate ].

Bitcoin miners use super cheap GPUs (not CPUs) to create the coins, but as
more people come online to make them, the algorithm adjusts so that one
block can only be made every 10 minutes.

Who Invented Bitcoins?
=========
An individual with the name -- or perhaps handle -- of Satoshi Nakamoto
first wrote about bitcoins in a paper called Bitcoin: A Peer-to-Peer
Electronic Cash System [ http://lnch.is/bitcoin-manifesto ]. This person has
stepped back from the project and trusted Gavin Andresen to take charge as
the project’s technical lead.

How Does One Buy and Sell Bitcoin?
=========
Currently Paypal and credit card companies are making it illegal to sell
bitcoins. Why? Simple: PayPal’s terms of service prohibit “currency
exchange.”

CoinPal had its account frozen, details here:
http://www.bitcoin.org/smf/index.php?topic=2555.msg101084#msg101084

Given that you can’t whip out your Paypal account and buy them, and that it
will become harder and harder to get them, bitcoins will be bartered for
services in the real world.

For example, a Hacker News community member named Nicholas Carlson just
boasted that he is being paid for a programming project in bitcoins [
http://ncarlson.com/post/5493803214/bitcoin-experiment-first-job-offer ].

Bitcoins in Real Life
============
In the next year you’ll hear about people in casinos in Vegas buying and
sell bitcoins for cash and casino chips.

Imagine a bachelor party comes to Vegas and STNY (someone that’s not you)
gives $550 to a guy at a bar and he takes out his laptop or tablet and ships
100 bitcoins to STNY’s phone. STNY then goes to Craigslist and ships some
bitcoins to an escort and a drug dealer, who then show up in person to
provide goods and services.

The Drug Underground and Bitcoin
============
Last month folks were buzzing about an online drug marketplace called
SilkRoadMarket [ http://www.silkroadmarket.org ], which was reportedly
trading in, well, all kinds of drugs: marijuana, mushrooms, LSD, ecstasy and
DMT.

Of course, since bitcoin transactions are untraceable, you would have zero
recourse if you sent a dozen bitcoins to someone for a couple of tabs of
LSD. Just like you might lose your $10 if you gave it to a kid in the school
yard for a dime bag and he never came back.

Let’s Make Some Predictions
============
We are 100% certain that governments will start banning bitcoins in the next
12 to 18 months. Additionally, we’re certain bitcoins will soar in value and
a crush of folks will flood the system and start using them.

Currently there are 6M coins at $6.70 each for a total economy of about
$40M. Bitcoin speculation and hoarding will also cause a massive spike in
bitcoin value. For example, if 10M people find out about bitcoins in the
next year and want to buy $100 worth, $1B will be infused into the bitcoin
economy.

Finally, there will be massive breakage in bitcoins. If your laptop crashes
and you didn’t back up your bitcoins, well, you’re SOL. If someone steals
you laptop that has 10,000 bitcoins on it you won on Bitcoin Poker, you’re
SOL. Lost your USB drive with 500 bitcoins on it after a night out on the
town? You’re SOL.

Sites like 99designs, eLance and oDesk will start accepting bitcoins for
payment. If they don’t, they will face competition from folks who do.

Bottom line: The world is going to be turned over by bitcoins unless
governments step in and ban them by prosecuting individuals.

This is about to get really interesting, everyone.

* We made this term up to describe the “good people” of the internet who
believe in the fundamental rights of individuals to be free, have free
speech, fight hypocrisy and stand behind logic, technology and science over
religion, political structure and tradition. These are the people who build
and support things like Wikileaks, Anonymous, Linux and Wikipedia. They
think that people can, and should, govern themselves. They are against
external forms of control such as DRM, laws that are bought and sold by
lobbyists, and religions like Scientology. They include splinter groups that
enforce these ideals in the form of hacktivism, such as the takedown of the
Sony Playstation Network after Sony tried to prosecute a hacker for
unlocking its console.

-----------------

TWIST Bitcoin episode
============
Full show:
http://thisweekin.com/thisweekin-startups/bitcoin-discussion-with-gavin-andresen-and-amir-taaki-on-this-week-in-startups-140/

Gavin explains the fundamentals of Bitcoin
http://www.youtube.com/watch?v=Ta73DofiT7o

Who is Satoshi, the mysterious bitcoin founder?
http://www.youtube.com/watch?v=RDRwgbWkxFw

The million-dollar bitcoin question: Can the system be hacked?
http://www.youtube.com/watch?v=G2837h-85O4

Jason sets his software to generate bitcoins and Gavin explains why that's a
bad idea
http://www.youtube.com/watch?v=jix4MG5V0-E

-----------------

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