Bitcoin: Difference between revisions
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|newspaper=[[PC World]] | |newspaper=[[PC World]] | ||
|url=http://www.pcworld.com/businesscenter/article/213230/could_the_wikileaks_scandal_lead_to_new_virtual_currency.html | |url=http://www.pcworld.com/businesscenter/article/213230/could_the_wikileaks_scandal_lead_to_new_virtual_currency.html | ||
| | |archivedate=2010-10-10 | ||
}}</ref> Anyone can view the block-chain and observe transactions in real-time. Various services facilitate such monitoring.<ref>[http://bitcoinwatch.com bitcoinwatch.com]</ref><ref>[http://www.bitcoinmonitor.com bitcoinmonitor.com]</ref> | }}</ref> Anyone can view the block-chain and observe transactions in real-time. Various services facilitate such monitoring.<ref>[http://bitcoinwatch.com bitcoinwatch.com]</ref><ref>[http://www.bitcoinmonitor.com bitcoinmonitor.com]</ref> | ||
===Monetary differences=== | ===Monetary differences=== | ||
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|iso_code = none;<ref>{{cite web|url=http://www.currency-iso.org/iso_index/iso_tables/iso_tables_a1.htm|title= Current currency & funds code list | publisher=SNV-SIX Interbank Clearing |archivedate=10 February 2010}}</ref> BTC used colloquially<ref>[http://www.bitcoin.org/faq Bitcoin website]. Main page, FAQ, and (extensively) ''Trade'' page all use the abbreviation "BTC".</ref> | |iso_code = none;<ref>{{cite web|url=http://www.currency-iso.org/iso_index/iso_tables/iso_tables_a1.htm|title= Current currency & funds code list | publisher=SNV-SIX Interbank Clearing |archivedate=10 February 2010}}</ref> BTC used colloquially<ref>[http://www.bitcoin.org/faq Bitcoin website]. Main page, FAQ, and (extensively) ''Trade'' page all use the abbreviation "BTC".</ref> | ||
|using_countries = Supranational, Internet-based | |using_countries = Supranational, Internet-based | ||
|inflation_rate = Approximately predetermined<ref name="whitepaper">{{cite book|last=Nakamoto|first=Satoshi|title=Bitcoin: A Peer-to-Peer Electronic Cash System|url=http://www.bitcoin.org/sites/default/files/bitcoin.pdf| | |inflation_rate = Approximately predetermined<ref name="whitepaper">{{cite book|last=Nakamoto|first=Satoshi|title=Bitcoin: A Peer-to-Peer Electronic Cash System|url=http://www.bitcoin.org/sites/default/files/bitcoin.pdf|archivedate=14 December 2010|date=24 May 2009}}</ref> | ||
|symbol = | |symbol = | ||
|nickname = | |nickname = | ||
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===Outcome=== | ===Outcome=== | ||
Proposed failure scenarios for Bitcoin include a currency devaluation, a declining user base, or a global governmental crackdown on the software. Succession to another similar cryptocurrency system is also possible, if a new one were to be created and considered to be more legitimate (e.g. backed by a large tech company or institution) or advantageous over Bitcoin in its current form (e.g. more scalable or user-friendly). It may not be possible to "ban all crypto-cash like Bitcoin."<ref name="obrien2010">{{cite news |title=Imagine your computer as a wallet full of Bitcoins |first=Danny |last=O'Brien |url=http://www.irishtimes.com/newspaper/finance/2010/1126/1224284180416.html |newspaper=[[The Irish Times]] |date=26 November 2010 | | Proposed failure scenarios for Bitcoin include a currency devaluation, a declining user base, or a global governmental crackdown on the software. Succession to another similar cryptocurrency system is also possible, if a new one were to be created and considered to be more legitimate (e.g. backed by a large tech company or institution) or advantageous over Bitcoin in its current form (e.g. more scalable or user-friendly). It may not be possible to "ban all crypto-cash like Bitcoin."<ref name="obrien2010">{{cite news |title=Imagine your computer as a wallet full of Bitcoins |first=Danny |last=O'Brien |url=http://www.irishtimes.com/newspaper/finance/2010/1126/1224284180416.html |newspaper=[[The Irish Times]] |date=26 November 2010 |archivedate=19 December 2010}}</ref> | ||
The decentralization and anonymity embodied by Bitcoin appears to be a reaction to the U.S. government's prosecution of digital currency companies like [[e-gold]] and [[Liberty Dollar]].<ref name="herpel2010">{{cite web |url=http://ssrn.com/abstract=1721076 |title=2011 Observations on the Digital Currency Industry |author=Herpel, Mark |date=6 December 2010 |work= |publisher=SSRN (Article for DGC magazine Jan2011) | | The decentralization and anonymity embodied by Bitcoin appears to be a reaction to the U.S. government's prosecution of digital currency companies like [[e-gold]] and [[Liberty Dollar]].<ref name="herpel2010">{{cite web |url=http://ssrn.com/abstract=1721076 |title=2011 Observations on the Digital Currency Industry |author=Herpel, Mark |date=6 December 2010 |work= |publisher=SSRN (Article for DGC magazine Jan2011) |archivedate=19 December 2010}}</ref> In an [[The Irish Times|Irish Times]] investigative article Danny O'Brien reported "When I show people this Bitcoin economy, they ask: 'Is this legal?' They ask: 'Is it a con?' I imagine there are lawyers and economists struggling to answer both questions. I suspect you will be able to add lawmakers to that list shortly."<ref name=obrien2010/> | ||
==Technology== | ==Technology== | ||
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=== Transactions === | === Transactions === | ||
Bitcoins contain the current owner's public key (address). When user ''A'' transfers some to user ''B'', ''A'' relinquishes ownership on them by adding ''B'' | Bitcoins contain the current owner's public key (address). When user ''A'' transfers some to user ''B'', ''A'' relinquishes ownership on them by adding ''B''âs public key (address) to those coins and signing them with his own private key.<ref>https://en.bitcoin.it/wiki/Transactions</ref> He then broadcasts these bitcoins in an appropriate message, the ''transaction'', on the peer-to-peer network. The rest of the network nodes validate the cryptographic signatures and the amounts of the transaction before accepting it. | ||
Because transactions are broadcast to the entire network, they are inherently public. Unlike regular banking, which preserves customer privacy by keeping ''transaction records'' private, transactional anonymity is accomplished in Bitcoin by keeping the ''ownership'' of addresses private, while at the same time publishing all transactions. As an example, if Alice send 123.45 BTC to Bob, a public record is created that allows anyone to see that 123.45 was sent from one of Alice's addresses to one of Bob's addresses. However, unless Alice or Bob make their ownership of these addresses publicly known in some way, it is difficult for anyone else to connect the transaction with them. | Because transactions are broadcast to the entire network, they are inherently public. Unlike regular banking, which preserves customer privacy by keeping ''transaction records'' private, transactional anonymity is accomplished in Bitcoin by keeping the ''ownership'' of addresses private, while at the same time publishing all transactions. As an example, if Alice send 123.45 BTC to Bob, a public record is created that allows anyone to see that 123.45 was sent from one of Alice's addresses to one of Bob's addresses. However, unless Alice or Bob make their ownership of these addresses publicly known in some way, it is difficult for anyone else to connect the transaction with them. | ||
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The Bitcoin network creates and distributes a batch of new bitcoins approximately six times per hour at random to somebody running the software with the "generate coins" option selected. Any user can potentially receive a batch by running it, or an equivalent program specialized for the equipment the user owns. Generating bitcoins is often referred to as "mining", a term analogous to [[gold mining]].<ref name="whitepaper"/> The probability that a given user will receive a batch depends on the computing power he contributes to the network relative to the computing power of all nodes combined.<ref name="FedProb"> | The Bitcoin network creates and distributes a batch of new bitcoins approximately six times per hour at random to somebody running the software with the "generate coins" option selected. Any user can potentially receive a batch by running it, or an equivalent program specialized for the equipment the user owns. Generating bitcoins is often referred to as "mining", a term analogous to [[gold mining]].<ref name="whitepaper"/> The probability that a given user will receive a batch depends on the computing power he contributes to the network relative to the computing power of all nodes combined.<ref name="FedProb"> | ||
{{cite news | {{cite news | ||
|title=The | |title=The FEDâs Real Monetary Problem | ||
|first=Thomas | |first=Thomas | ||
|last=Luongo | |last=Luongo | ||
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|newspaper=[[LewRockwell.com]] | |newspaper=[[LewRockwell.com]] | ||
|url=http://www.lewrockwell.com/orig6/luongo7.1.1.html | |url=http://www.lewrockwell.com/orig6/luongo7.1.1.html | ||
| | |archivedate=2010-10-12 | ||
}}</ref> The amount of bitcoins created per batch is never more than 50 BTC (plus transaction fees), and the awards are programmed to decrease over time down to zero, such that no more than 21 million will ever exist.<ref name=lwn /> As this payout decreases, the motive for users to run block-generating nodes is expected to change to earning [[#Transaction fees|transaction fees]]. | }}</ref> The amount of bitcoins created per batch is never more than 50 BTC (plus transaction fees), and the awards are programmed to decrease over time down to zero, such that no more than 21 million will ever exist.<ref name=lwn /> As this payout decreases, the motive for users to run block-generating nodes is expected to change to earning [[#Transaction fees|transaction fees]]. | ||
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|date=23 March 2011 | |date=23 March 2011 | ||
|publisher=[[Slashdot]] | |publisher=[[Slashdot]] | ||
| | |archivedate=29 March 2011}}</ref> | ||
Alternative [[user interface]]s include [[bitcoin-js-remote]], a [[JavaScript]] web user interface for Bitcoin wallets,<ref>{{cite web | Alternative [[user interface]]s include [[bitcoin-js-remote]], a [[JavaScript]] web user interface for Bitcoin wallets,<ref>{{cite web | ||
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|author=tcatm | |author=tcatm | ||
|work= |publisher=[[GitHub]] | |work= |publisher=[[GitHub]] | ||
| | |archivedate=29 March 2011}}</ref> as well as Spesmilo, a [[PySide]] interface more open to a diversity of users which can run independently of an external wallet.<ref>[https://en.bitcoin.it/wiki/Spesmilo Spesmilo, PySide Bitcoin client]</ref> | ||
==See also== | ==See also== | ||
